The “Not So Financial” Retirement Dilemma of Business Owners

Retirement is an exciting stage in a business owner’s life. It brings many possibilities, like chasing dreams of leisure, traveling to new places, or simply unwinding and enjoying the results of your years of hard work. But retirement also brings some uncertainties and questions beyond money.

According to the BDC, four out of ten entrepreneurs in Canada plan to leave their businesses in the next five years. Are you one of these entrepreneurs? Are you anxious when you think about your business succession?

As a wealth management advisor with CI Assante and an entrepreneur myself, I understand the questions and concerns entrepreneurs have about retirement. I also know that there’s much more to retirement than just the financial aspect. In this blog, I address some of the questions I’m often asked by my clients, which are part of what’s known as the “retirement dilemma”. I hope this information will help you start thinking about your retirement goals and desires and eventually put in place an effective retirement plan.

When Should I Retire?

For a business owner, retirement doesn’t come with a set timeline. When to retire is a personal choice influenced by your finances, market conditions, and personal goals.

For instance, there may come a time when you lose interest in your current business or wish to explore entirely new paths beyond your original venture. Health concerns could also limit your ability to give your business the attention it deserves. (By the way, that’s exactly how I became the owner of The Groupe St-Georges, following in my father’s footsteps and taking over his wealth management firm.)

You’re probably also very attached to your business, and deciding to leave it is a difficult decision. Some entrepreneurs are preoccupied not only with the preservation of their family and business legacy but also with protecting their employees and keeping the business in the community. Finding the right buyer to meet your requirements is also part of the “when” of retirement.

Whatever your goals and requirements, having a retirement plan in place before you even start thinking about retirement will ensure a smooth transition and enable you to react quickly if a serious buyer (if you want to sell, of course) comes along sooner than expected.

What Should I Do with My Business?

While approaching retirement, many business owners will ponder over the future of their business. This is a legitimate question and part of the retirement dilemma for entrepreneurs. It’s just like choosing a career path—for some, it may be crystal clear, while for others, it may demand more thought. If you belong to this latter group, here are three potential scenarios:

1. Selling the business to a shareholder or a third party: You may decide to sell your business to someone outside your family. This could be a shareholder, a buyer not connected to your business or one (or more) of your employees. This choice can stem from different reasons, such as family members having different goals or requiring quick money. If you decide to follow this route, you need to get your financials in order before the sale to ensure it’s a smooth process.
2. Handing over to family members: If you intend to hand over your business to a family member(s), it’s a good idea to have a conversation with them first to find out if they’re interested in taking it on. Often, business owners discover that their children have different career aspirations and are not keen on carrying the future reins of the family business. Your decisions will depend on their interests and abilities while also ensuring fairness among all family members. Don’t be afraid to discuss your business goals, principles, and values with them. Having a succession plan can help prevent potential family conflicts over control in the future.
3. Closing the business: Though closing your business is never the best option, you may decide to do so due to financial challenges, changing market conditions, or personal reasons. Always consult with a financial advisor before deciding to take this step.

Building a business succession plan before your retirement ensures that you are well-prepared for it. By setting expectations and roles for everyone involved, you can avoid any misunderstandings and potential conflicts once you give up control. Discuss your vision with those involved, as well as your wealth management advisors, and understand their viewpoint before you retire to ensure that the transition is smooth.

What Will I Do After?

Another question that accentuates the retirement dilemma for many entrepreneurs: What will I do after? Once you retire as an entrepreneur, you may decide to stay involved in some capacity, either full-time or part-time. This option lets you contribute meaningfully while shouldering less responsibility, benefiting both the business and your income stream.

Alternatively, you can step away, passing the reins to others and pursuing personal hobbies and dreams. Some business owners who take this route choose to become mentors or volunteer in various capacities. You can also consider investing in new opportunities that allow for a more relaxed lifestyle while continuing to utilize your entrepreneurial skills.

As you can see, there are so many options available to enjoy retirement in its many dimensions. Having objective, relevant information and proper guidance can help you make the choice that’s right for you.

Conclusion: Plan Your Retirement Holistically

I’m sure you have many other questions and concerns about your retirement. As an entrepreneur, the decision to retire goes far beyond financial considerations. As discussed above, this decision is intimately linked to your aspirations and emotions and can have an impact on your business, your employees, and your family. A professional wealth management advisor can help you put in place a retirement plan that will meet your monetary needs while respecting your goals and wishes for you, your business, and your family.

As a strategic wealth advisor, I enjoy helping my clients achieve their retirement goals. I’m also aware that every situation is unique and complex. My approach is to discuss and work closely with my clients to propose the right wealth management strategies that will help them grow their wealth while helping them make their dreams come true. Contact me to discuss your wealth management and retirement goals and concerns.