Francesca Giroux, CPA
For the Lakeside Leader
For small business owners nearing retirement it is important to consider how to make your business more saleable sooner rather than later. The sooner a retirement or succession plan is considered the more choices there are available to you with regards to the sale of your business and tax planning arrangements.
If you are still heavily involved in the day to day operations of your business perhaps you should consider taking a step back and letting a greater weight rest on management’s shoulders. If as the business owner you continue to be involved with every minute detail of the daily operations of your business this will make it more difficult to step away from and ultimately sell to another individual because the business relies on you to function. A purchaser is often looking for a package deal, something that they can step into and continue operations without a significant downtime in operations. It would be prudent to consider making your business self-sufficient, something you could step away from and another owner could take over the reigns. This is where delegation and training becomes key. Determine who in your business you can shift some of your responsibilities to and if they require additional training or guidance in order to adequately handle the new tasks assigned to them. Perhaps there is a manager, or a key foreman who could handle those responsibilities, and then they can delegate additional tasks to other employees.
Another possibility is to consider how your business can earn income with minimal work on your end. If you have excess cash it would be a wise decision to consider investment in commercial property. Commercial buildings with multiple bays could be used for your existing business, and rented out to other businesses. The rental income would require minimal effort and could continue to provide a steady source of income into retirement, long after you step away from the daily operations of your business or sell it all together. In addition, land and buildings tend to appreciate in value over time.
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Information provided is of a general nature. As each individual or company’s situation is unique, you may wish to consult with your CGA for information specific to your own needs.