We know what retirement is supposed to look like: Golf games, travel, no stress, spending lots of time with family. It shouldn’t be painful.
But for many business owners, it can be a difficult and damaging experience. Let’s consider why.
Like most business owners, you’ve probably invested many years of your life and a large portion of your financial resources in your business, taking precious little time off to focus on yourself outside of the business. Frequently, owners are so focused on their businesses that their other passions fall off the radar. And after working in the business for so long, you are probably not used to thinking about yourself independently from the business. Chances are – even if you’re getting close to thinking about selling your business and retirement – you’re still putting yourself last, focusing mainly on the financial aspects of a transition.
A recent article in MarketWatch, “Why retirement can be a dangerous time,” highlights research which shows that “calling it quits after decades in the workforce jolts people from their routines, and causes them to lose their sense of self… It can cause depression and sickness, and even death, for some, while others might find pressure placed on their relationships and daily routines.”
The key here is recognizing that the non-financial aspects and emotional preparation are an essential part of the transition process. In fact, before anything else, the first step in our 6-step Business Ownership Transition Planning Process is “Getting Yourself Prepared.”
Let’s take a look at some ways that transitioning business owners can buck these trends in order to make the next stage of life their best stage of life.
Getting Yourself Prepared
Not preparing yourself intellectually for retirement “can be detrimental to a retiree’s physical and mental health,” according to the MarketWatch article. And, it’s likely that this can be even more challenging for business owners who are planning to transition out of their businesses because their identity and that of the business often become one and the same.
Those getting close to retirement need to begin early to consider what their situations might be like after they retire. At BTA, we suggest owners give themselves at least 3 to 5 years to prepare for all aspects of a business exit. It will take a good amount of time to separate yourself from the business – at least emotionally – so you can begin to think about your situation objectively.
One retirement expert puts it into perspective: “You worked for 30 years, and then you go into the next 30 years,” he says. “Doing nothing isn’t feasible. It is really just the next phase of life, and being deliberate in how you fill it.” Another expert suggests that you look back on the retirement journey of your loved ones, including parents and in-laws, to examine both positive and negative aspects. Then you determine what aspects you want to be similar or different in your own retirement.
Determining Your Non-Financial Goals
In our book, Cashing Out of Your Business, we discuss both financial as well as non-financial goals and objectives. Our lives are multi-faceted and it’s crucial to give proper attention to every aspect as you plan for the future. While the list will vary for each individual, non-financial objectives you may want to consider include:
- Regaining balance in your life
- Improving your physical health
- Preserving intellectual stimulation
- Increasing volunteer/philanthropic work
- Developing recreational/creative outlets
- Spending more time with your spouse/partner, other family members and friends
- Determining where you want to reside
- Pursuing a forgotten or new passion
Understanding your focus will re-energize you and provide you with direction as you figure out what your retirement will look like and the best way to transition the ownership of your business.
Crafting the Best Stage of Your Life
After all of your hard work, you deserve to achieve your goals for your wealth, your business, and your life. And, as the article suggests, if you don’t like the retirement you’ve come up with within the first year, you can change it to something else.
With the proper planning, your next stage can be whatever you want it to be.