I’ve helped a lot of people with succession planning, and I generally offer up advice on the quality of a company’s financials, or the right time to sell a business. But there is one element of succession planning strategies that it’s difficult to help you with: I can’t tell you when the time is right.
It’s like when a young couple is planning to start a family. When is the right time to have a baby? Some might say there is a never a right time. Things will never be as good as you want them to be. It’s all relative.
The same applies to retirement. I have a friend whose goal is to retire with $5 million in assets. That’s great. I have another relative who is more than happy to live with the social security benefits she garners from her $30,000 a year job. That’s great too.
The bottom line is that you don’t need to assess your bottom line based strictly on your cash flow. You also need to think about your life from a quality perspective, and you can assess it through quantitative means. Break down the numbers in the following way:
- Are you spending too many hours at your printing business? Look at your age, look at the amount of hours you’re spending at the plant, and then think about the two. Listen, there is a finite number of hours remaining in your life. Do you want to spend all your time at the job?
- How much have health problems impaired your life? You hear a lot about athletes saying they’re only “75%” healthy. Why not apply that same percentage to yourself? If health problems restrict you to only 50% of your capacity, shouldn’t you consider retiring so you can either nurse yourself back to health, or enjoy your remaining time as best you could?
- Have you surveyed your loved ones? Here’s a bold move. Survey your family. Ask them to fill out an objective questionnaire, and rate your relationship. How do you score? Are you hitting 8s or 9s out of a scale of 10? What number is acceptable? You might think I’m kidding on this, but I’m not. Find out the answer, and adjust your retirement plans accordingly.
- How many items have you checked off your bucket list? If you’ve made a bucket list, maybe it’s time to quantify what it will really take to achieve IT. How many years will it take to check all the items off? Do you think it’s realistic? You only go around once, friends.
As you can see, what started out as a qualitative question morphed into a quantitative exercise. And that’s really how we try and use numerics: As guides, as indicators, as signs of when the time is right. You can do the same as you create your succession planning strategy.
Photo by DaveBleasdale