At a recent speaking engagement for family business owners, the attendees were very concerned about knowing how and when to exit their companies. After a bit of discussion it became clear that this particular group of business owners had set aside very few retirement assets for themselves. Many seemed to be holding out hope (unrealistically, in the vast majority of cases) that a deep-pockets buyer would waltz in after their 65th birthday and cash them out the old-fashioned way by buying the business and all its assets.
Our question to them was: Why wait to fund an eventual exit? What is the advantage in that? We encouraged them to pay themselves first! Family business owners should prefinance their eventual departure by taking money out now!
Whether you plan to retire at 55 or 80, your exit is inevitable. Start prefunding now by systematically harvesting a fixed amount or percentage of money each week or month from your family business. Pay yourself first and put those dollars aside in some alternative investment and you’ll ultimately be able to exit your company with financial security and be blissfully independent of your children in your golden years.
Wayne Rivers Family Business Institute Raleigh, N.C.