Don’t believe that you can retire from a small or medium business and live off the dividends which will flow, because they always have.
Here is the theory: The business is well run, it is managed by people who do everything for you. Yes, you are in the business on a sort of daily basis, but you don’t do much more than show your face. So why be there at all? You go away for a week here, and a week there. Never a problem…
So why not leave it like that, and go for one week long leave after the next, and then the next. What you’re suggesting here is that you retire, and leave the business to run in your stead, managed by the same people who are currently there, and doing a good job.
Here is the practice: You announce your retirement, and throw a small party. For a while, you have let “them” know what your plans are, and you have announced the anointing of your successor, “who really has been running the company for the last year, you know”, you will tell everybody.
Here is the outcome: The person managing your business is not an entrepreneur like you. She is a manager, and probably a very good one. But if she has no skin in the game, she will not pay as much attention as you do (even if you think you don’t). Like it or not, you really do a lot more than just go on leave. People really do need you to be there as a safety blanket, someone they can call for a bit of assurance, to confirm a decision, to give a gentle pat on the back. You know what I mean. You really do, if think about it for a short while.
So the outcome is that morale will fall, almost certainly from the first week. The brother leader has gone, for heaven’s sake! The new boss has not grown up in this environment of dealing with all the different aspects you have become accustomed to over the years; most notably the workplace politics.
Very interesting and all too true. But what is to be done when this situation does arise?
Well I guess that the point is that we small business owners are not the owners of small corporate concerns. We own small, closely held money spinners. We have so much skin on the table that it sticks when we leave, and we leave a sweaty, messy stain if we don’t plan the exit with some decorum. Employees taking over the reigns from the ghost of MD Past will forever second guess themselves, particularly when they continue to be answerable to the same person who may not be involved from day to day, but who will be asking some awkward questions at the AGM, and be able to dismiss them, still.
In my experience as a seller of businesses, owners get far better bang for their buck by actually selling the things, and investing the proceeds in a much wider range of investments, with far less risk attached, than believing the business will continue to run at the same standard as previously. Your former employees will at best be scared to make a mistake, and so will not stretch the envelope in the way you did to get it to its current position.
It’s an entirely different matter where one of several shareholders retires, leaving his former colleagues to run the show as they previously did, or now are free to do. They are entrepreneurs, and they are more likely to make a success of it.
As a business owner, you understand entrepreneurship. Employees just don’t.
I am sitting with almost the exact scenario….our director whose mind is already in retirement and is oblivious to what is obvious. For 13 years I have been his right hand and basically managing the business with him, his 2 sons are now learning to take over the business, well, have actually taken over…they are knowledgable to a point….but totally lack the people aspect so sitting with a situation where there is no respect.
Sad, could be a dynamic business but its going downhill. Respect and team effort go a far way.