At the grand age of 94, world-famous investing legend Warren Buffett has stepped down as CEO of his company, Berkshire Hathaway.

When stepping down, Buffett exclaimed, “I have no intentions, zero, of selling one share of Berkshire Hathaway. It will get given away gradually”, MSN reported.

Not only is Buffett one of the most successful investors who ever lived, but as the CEO of Berkshire Hathaway, he has paved the way for the company to outlive him. As a business owner yourself, you may be concerned with how to do this for your own enterprise.

If succession is on your mind, here is what Buffett’s recent departure from Berkshire Hathaway could teach you about leaving your business’s legacy to the next generation.

1. Prepare your successor far ahead of time

After 60 years at the helm, Buffett leaves some rather large shoes for his successor to fill.

Fortunately, he has been preparing Greg Abel, Berkshire Hathaway’s Vice Chairman, to assume his role for many years. Abel assumed the position of Vice Chairman of non-insurance operations in 2018, and since 2021, Buffett has made it clear that Abel will take over once he decides to retire.

There are several crucial lessons to pay attention to here.

First, Buffett made it clear – to shareholders as well as his successor – who would take over. There was no confusion, meaning that Berkshire Hathaway’s shareholders were not taken by surprise when the announcement was made four years later. As a result, according to Google Finance, Berkshire Hathaway’s share price remained relatively stable during and after the announcement that Buffett was stepping down. His departure could have been a market disaster, but thanks to forward planning, it wasn’t.

Secondly, from an internal perspective, Buffett had plenty of time to supervise and train Abel in the role of CEO. Acting as a role model, and gradually handing over an increasing amount of responsibility, Buffett was able to give his successor all the ingredients he needed to thrive.

As a business owner, your own successor may need time, experience, and mentorship to truly thrive in the role once you retire. Whether this is a loyal employee or a family member – or both – remember to start planning who will take over years in advance, giving everyone plenty of time to adjust.

2. Be humble when your time in the sun is over

One notable quality that Buffett has always demonstrated is humility. Although he is clearly a hugely talented businessperson, Buffett understands that as he aged, his leadership abilities faded.

As reported by Reuters, he told shareholders, “The fact you can do pretty well doesn’t mean you couldn’t do better – and Greg can do better.”

One of the hardest things a person can do is keep their ego in check, but if you’re approaching retirement, this may be exactly what you need to accomplish. Reflecting on whether your time in the sun has passed, and acting on it, may be what your business needs to outlive you.

It may even bring you great joy to finally release the reins and allow the next generation to have its turn. Especially if you have spent a long time preparing for the transition, you may find that relinquishing control is the best decision you have made in a long time.

3. Consider your options for staying involved even after retirement

Despite handing over the role of CEO to Greg Abel, Warren Buffett intends to remain in the loop where Berkshire Hathaway’s investments and major decisions are concerned.

Reuters reports that Buffett casually said he’ll “hang around and conceivably be useful in a few cases” but that Abel will have the “final word” on everything.

When it comes to your business, you may want to retain some form of control after you retire. Perhaps you want to keep part ownership of the business itself, or be consulted regarding major decisions, such as a future sale. No matter what you want to achieve, it’s best to begin weighing your options and consider what is best for the business as well as your own personal and financial interests.

That’s where the “slow and steady wins the race” ethos really comes into play. If you rush into your retirement, you may make choices that do not align with your wishes or financial ambitions. As Buffett has exemplified, approaching your retirement with cautious optimism leaves you with more choices and, crucially, plenty of time to find an outcome that suits everyone.

Get in touch

Are you ready to exit your business and retire, or weighing your options for the future?

Our financial planners work with business owners like you who need long-term guidance on all matters of personal finance.

Email us at clients@iqf.ie, or call 353 71 915 5560.

Please note

This article is for general information only and does not constitute advice.

It describes financial planning services that iQ Financial can offer to you. Financial planning services are not regulated by the Central Bank of Ireland.