It’s funny the way people work. We have no problem imagining a life of retirement and leisure in our twilight years, but ask someone to plan for their business’ succession and they get that kind of glint in their eye that says ‘you’ll have to pry it from my cold, dead hands’.
Ok, maybe right now you can’t imagine putting down the torch, let alone passing it down. When you’re in the thick of your professional life still brimming with the vigour of what you might consider for your business next, the idea of stopping can seem incongruous. I mean, really – there’s just too much to do. You can’t step back from anything right now, maybe next year when all of your work will be totally done forever and nothing new will arise. Then you can revaluate the situation.
Whether you intend to retire and remove yourself entirely from working life or merely step back and reduce your role, you want to make sure that who or whatever you leave behind is on the same page as far as your involvement (as well as your stake in the business!).
Why should it matter to you?
It’s a fair question, if you’re stepping away. What’s it to you if things fall apart once you’re gone? Well, aside from any notion of legacy or sentimentality, if you can retire with a good stake in a prospering business, you’re in an excellent position to live out your retirement in comfort. Ten years down the line you’re still taking a decent cut of what could be, with the right planning and leadership, a thriving business. Whatever system or plans you put in place before you depart could very well set a chain of events in motion to secure not only your legacy but also your future.
And then there’s always the ‘hit by a bus’ thing. We all think it only ever happens to other people – but if the people it happens to own a business, it can be very, very messy for all concerned, particularly for mourning loved ones or staff with no access to keep things going.
So, what do you do?
To start with, you might not want to put all your eggs in one basket. We get it, you have a favourite up and comer. It’s hard to think of giving up your business to anyone but if you had to pick, it would be them. So, you pour your energy into mentorship, show them the ropes, really invest in this person. They thank you, pack up their things and take all that training somewhere else.
As much as your business seems like the most important thing in the world, other people have different ambitions. Make sure anyone you’re considering passing the reins to knows it’s an option and try to suss out whether that’s something they can see themselves doing.
If you’ve got a few options, make sure they know they’re not the only one you’re considering. The last thing you want to do is sabotage a perfectly good employee by making them think they’re next in line only to be passed over at the last minute with no warning. Your company’s new leadership is not a party, and it shouldn’t be a surprise. Make sure all the important players understand the situation so you can start gearing up for the handover process. Speaking of which….
Don’t leave your successor holding the bag.
Orchestrating a hand-over correctly, in terms of your people, your customers and from a tax perspective is a lengthy process. For starters, you can’t just assume that because someone knows how to work for you they know how to be you. There are things you do every day that you might never think to mention if they weren’t pointed out to you and a business is more than just the day-to-day operations. Your long-term strategies may or may not have played out by the time you step away, so make sure your successor knows all the moving parts of your big goals so they can make informed decisions as to what action to take.
When you get to within range of coo-ee, you’ll want to transition in your person, slowly enough so that a: they’re good with being you and b: your customers aren’t ‘shocked’ when it actually happens. You want them to think this was the careful plan to look after them all along and they’re comfortable with it – not that they’ve been ‘sold off’ as part of your retirement plan. That’s not fair to them or your successor.
Plus you’ll want to have worked through all things taxation to make sure you’re getting the best start at retirement as possible. Given the seemingly never ending changes to super and regular tax systems (regardless of which side is in government), make sure you get yourself some great advice before you finalise your plans.
And that’s where we can help. If you want to chat with someone about safeguarding your legacy (and your future!) and minimising your tax now and into the future, we’d love to help. You can call us on 02 6023 1700 or drop us a note via the form below.
Got a question? Get in touch
If you've got financial or business questions, or you just want to run something by us, we'd be delighted to really talk to you – in person, over the phone - call us on 02 6023 1700 - or you can use the form below and we'll get back to you.