We have all heard the saying that you should not think of retirement as retiring from work, but rather as retiring to something better.
However, for some approaching the retirement milestone, this may not be the case. Retirement may instead loom as a time of uncertainty and fear about what the future holds.
In particular, this may be the case with business owners whose work is the lynchpin of their life and they have had little time or inclination to develop outside interests.
Statistics show about 80 per cent of business owners intend to retire in the next 10 years, yet nearly three quarters of them have no succession plan. The reasons often cited for this include:
• A low level of trust in the abilities of the successors
• Unwillingness to let go
• Little interest from potential successors
• The financial capacity to retire.
But it is often more than this. In many cases, those approaching retirement are concerned that their relevance in business, social and family circles will be diminished once they cease their working lives.
There are a few tips to bear in mind to help make this process easier.
Succession need not be retirement
Succession planning should not be about getting old, stepping down, being unable to contribute anymore, or any other thoughts along these lines. For those who have this view, it is unlikely the succession process will take place as they will be reluctant to let go.
Rather, business owners should put in place plans that see succession as the evolution of the business and a legacy that they leave for others to continue and build on.
Business owners need to ensure they have not only set the goals for the succession process, but also for life after they exit the business.
The business goals will guide everyone through the process.
Setting personal goals – such as travel, study, volunteer work, learning a sport or taking up other hobbies – will give the “retiring to” motivation.
Understand strengths and weaknesses
Everyone has a different psychological make-up, particularly Baby Boomers and Gen Xs.
Business owners and founders are typically entrepreneurs who dislike repetition, rules and letting go.
Often they have a lack of interest in detail and therefore a formal succession process can be challenging, particularly when they have no vision about where their energies will be directed in the future.
The key to retiring successfully is ensuring a picture is created of the future and what can be achieved, so there is something to look forward to and to work towards.
Life after work
All too often, business owners work full-time right up to their last day and then wake up the next day wondering what they are going to do for the next twelve hours – and subsequent days, weeks and months.
Ensure that the succession is staged so there is time to become accustomed to the things that can be achieved in life after work.
Consider extended leave breaks or a shorter working week so that a pattern can be developed for the coming change in circumstances.
Don’t waste skills
Just because someone is no longer working in the business, it doesn’t mean that their skills need to be lost.
Whether it is taking on board positions, charity work or similar activities, there are many opportunities to use hard-earned skills.
Keep calm, don’t panic
Often I hear clients say that they don’t want to retire because they don’t know what they will do with themselves.
But six to twelve months later, those same clients are saying they don’t know how they ever found the time to work.
These clients are the ones who developed their bucket lists and outside interests, and planned for this next life phase.
Colin Emmott, partner, HLB Mann Judd