Prepare for retirement in 5 steps

Retiring as a business owner takes preparation. To get it correct requires planning, identifying your options, and carefully choosing options that support your legacy and retirement goals. This post outlines the 5 steps you need to take as a business owner to ensure successful retirement planning.

Step 1: Explore your options and grow

Before you start your retirement planning, it’s important to make sure your business reaches its full potential. This is done by evaluating your organization and discovering opportunities for growth and enhancements to increase your business value and net worth. This stages your business for transition and strengthens the resilience of your business. Bringing in business exit planning advisors at the start of the process, early on in your business, gives you the benefit of ensuring that you are making the correct decisions each step of the way. Quest advisors are experts at the Explore and Grow stages and can identify your goals, outline your options, increase your value, and monitor your progress to allow for a successful outcome.

Step 2: Prepare for change

Once you have worked through the Explore and Grow stages, you are ready to prepare for transition. This is the stage you want to make sure you have specific goals established for after you exit your business. We call this the Change stage. Your retirement plans may prioritize getting the maximum value at close or keeping the business in the family.Whatever your goals are, it is important that you have an eye on your retirement plans throughout the Change stage. A business advisor can support your personal planning so you can determine your cashflow goals during your lifetime as well as consider your legacy and estate transfer intentions. Once you are able to define these, it is much easier to establish whether the sale of your business will meet your established goals and what you need to do to close the “gap” that remains between your goals and your current business value. We can work with you and your business to fine tune any areas that will increase your valuation in order to reach your goals.

Step 3: Evaluate tax opportunities

One of the ways to maximize your retirement planning is to approach the sale of your business smartly by considering tax opportunities throughout the process. We dive into this a little deeper in our blog post, “Top Tax Opportunities Before, During, and After M&A Transactions.” Essentially, deferring taxes on merger and acquisitions (M&A) transactions can be beneficial to all parties involved. Your retirement plans may offer opportunities to shelter income and defer or eliminate taxation. Our business advisors can help you navigate tax opportunities and fold these into your exit planning strategy.

Step 4: Develop a succession plan

The next step is perhaps the most important step for preserving your legacy and increasing the value of your business. A succession plan will also minimize risk for the new owner, driving up the value of your business after the sale. A business advisor is equipped to cover all your bases when it comes to putting a comprehensive and strategic succession plan in place. This should include stabilizing your workforce to keep them safe through the transition, preserving value for your heirs should something happen to you, allowing continuity of business for your customers and vendors, and providing a roadmap for your leadership team and advisors.

Step 5: Consider your legacy

The final step of the retirement process is deciding when you are ready to retire and what your legacy is. The correct time to retire may be prompted by internal or external drivers. Internal drivers could be contracts, growth plans, or your succession plan. External drivers may include the economy, taxation, or the industry life cycle. This can often mean the business owner is forced to decide which path forward for business succession best maximizes value while making a smooth continuation for stakeholders.When you are ready to retire, our business succession advisors are here for you – before retirement and after retirement. We help our clients through the Legacy stage by setting up what we call a “family office.” We work with your financial planners, CPAs, and attorneys to answer all your questions and handle any and all complex family needs to meet your financial goals.

Thinking of retirement?

We know your personal and professional goals often overlap. We want to make sure you preserve your legacy and meet your retirement goals. To learn more about our services at each step of the retirement process and to chat with our expert business succession planning consultants, click here to contact us.

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