First off, I have to apologize. Contrary to what I said in my last post Succession in a Family Business: Blessing or Course? I have not yet talked with my other three sons, who are not involved in the business, about taking over the company.
Before we left on our fishing trip my wife, true to form, asked me a very smart question: Was this the right time to bring it up? If I had to be honest, the answer was no.
Our weekend getaway was a time for bonding, not to talk shop. So thanks, Mona.
Before starting the succession process…
So where does that leave me now? To be frank, I’m still at square one. What I mean by that is, I conducted a thought exercise and realized that my business is not ready for succession in the sense of being sold. Why? Because too many aspects still depend on me.
One of the questions I asked myself was, Could I take a three-month leave of absence from the company without impacting it? The response was a categorical no. Why? Because the company still relies on me for all of its sales. If I weren’t there, we would have few or no sales, which would harm the company.
Next, I completed a financial planning exercise to find out how much money I would need to maintain my current lifestyle in retirement. It turns out I would need—drumroll, please—$6,000,000. As it stands, my company could never sell for that much money.
Given this new perspective, it is clear that Christian and I have our work cut out for us. But the good news is that we have time. I’m not looking to retire in the next year. According to our original plan, I still have six years, maybe more if I’m still healthy—and if my son can stand me for that long!
The process of reflection on succession and the price of freedom
If you are a business owner, I invite you to conduct the same analyses I did.
- Could you take a three-month leave of absence from your company without affecting it?
- Do you know the net figure you would need to sell your company for to maintain the lifestyle you want to have in retirement?
Remember that old maxim: Failing to plan is planning to fail.
Like the vast majority of small business–owners, I want to relax in my retirement. I’m done making sacrifices. I want a life of leisure—but leisure comes with a price tag.
If you want to learn more about the thought exercises I used, feel free to contact me. I’d love to chat.