The Special Challenges of Retiring From a Business You Own
RETIRING is challenging for almost everyone. But if you’re a small-business owner, preparing to hand your company to your children can create an even bigger knot of anxiety–worries about financial security, the legacy of your life’s work and the prospects for your offspring. The process can touch everything from spreadsheet-driven company valuations to awkward talks about your children’s limitations. It can demand the technical knowledge of a C.P.A. and the soft skills of a psychologist.
“One of the first questions you have to ask yourself is, ‘Do I have financial security if my kids run this business into the ground?'” said Kelly A. LeCouvie, a Toronto-based consultant with the Family Business Consulting Group. “It’s a possibility. You may have enormous faith in your children, and often that perception reflects reality, but sometimes it doesn’t.”
More business owners may soon be faced with such uncomfortable questions. In a 2007 report, the United States Census Bureau found that a third of small-business owners were 55 years or older and that about a quarter of small businesses were family-owned.
For people who want their children to take over their businesses, consultants like Ms. LeCouvie stress the importance of planning–the further ahead, the better. Adequate time enables smooth succession and lets people compensate for deficits. Perhaps the parent needs a few years to put more money aside or the child needs to get more training or meet more customers. read more
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