After dedicating years to growing and
nurturing your business — more
than half of your lifetime, in many cases — how do you step away from the
24/7 role of chief executive officer and
back into just being “you”? Many business
owners struggle to reclaim their identities
after retirement.
“There is a very odd feeling when you
wake up in the morning and you do not
have anywhere to go for the first time,”
says Joel Guth, an advisor with Citigroup
Global Markets Inc.’s Family Office in
Columbus.
“When you think about why you created
the business and accumulated wealth, it
probably was so you could live your lifestyle, support your family and have an
impact on organizations that are important
to you,” Guth says. “It’s important to consider what the next 20 to 30 years after retirement will be like without the business.”
While you’d probably shudder at the
thought of running your business without a
mission statement, have you adopted a
family or personal mission statement?
Have you already articulated what you
want to accomplish separately from your
business?
Smart Business discussed with Guth
why planning the personal side of retirement is critical to a successful exit strategy.
What is the first issue you address with business owners who are planning retirement?
First, we address lifestyle. What kind of
lifestyle do you want to have in terms of
income? So much of your personal life is
wrapped up in the financial side of the
business: cars, travel and entertainment.
When you recast your financial statements,
both personal and for the business, how
much income do you need to support your
chosen lifestyle? Then, create a personal
budget. What do you need to be happy, and
do you already have adequate savings to
sustain that level?
Does this affect how soon a business owner
can retire?
Yes, if you are currently at a level that can sustain the lifestyle you prefer, you have
decisions to make. Would you like to maintain some involvement with the business,
or do you want to sell it and walk away?
Your timeline for exiting the business dictates when you will need to begin the succession or merger and acquisition process.
Ideally, you should plan three to five years
in advance. Meaning that if you want to
retire in 2009, you need to begin the succession/exit process now. Because the
reality is that you’ll need at least 6 to 18
months to identify a new owner (if you
sell), and this candidate will likely want
you to stay in the business for 6 to 12
months while he or she transitions into
your role. If you plan to pass the business
to a family member, you must start developing a succession plan in terms of who
will take over your daily responsibilities
along with the most efficient manner to
transfer ownership.
During this planning time, what should an
owner be thinking about personally?
Everyone’s ideas for the perfect retirement are different. Maybe you will start a
new venture, perhaps turning a passion
into a new business. For example, one of
our clients left his primary business to purchase and run an art gallery. Or perhaps you’ll act as a mentor to younger business-people. Many retired executives get involved in charities.
We challenge clients to think about the
next 5 to 10 years and outline their top two
goals in each of the following areas: family,
health, charity and community. Ultimately,
you will experience a successful, fulfilling
retirement if you get involved in a passion
or pursuit after you exit the business.
Think about how much free time you
have today, and what you choose to do
with that time. Now, imagine that you have
triple the amount of that time. Could you
occupy it with what you do today? If not,
how will you spend that time?
It’s not unusual for business owners to
learn that they haven’t cultivated interests
outside of their companies. The business is
all-consuming and other outside interests
go by the wayside. If this describes you, an
important part of your retirement planning
is to devise a strategic plan for what you
want to accomplish outside of your business. And what are the initial steps to realize this vision?
Statistics have shown that without a motivating vision, when people quit working,
their life expectancy decreases. We are living longer, and we are living healthier. After
exiting a business, you must have fulfillment
in the rest of your life, and you will need a
plan to accomplish that.
Unless you are otherwise advised in writing, Citigroup Global Markets Inc. is acting
as a broker-dealer and not as an investment
advisor.
Citigroup Family Office is a business of
Citigroup Inc., and it provides clients with
access to a broad array of bank and non-bank
products and services through various subsidiaries of Citigroup, Inc.
Citigroup Family Office is not registered as a
broker-dealer nor as an investment advisor.
Brokerage services and/or investment advice
are available to Citigroup Family Office clients
through Citigroup Global Markets Inc., member
SIPC. Joel Guth is a registered representative of
Smith Barney, a division of Citigroup Global
Markets Inc., and has qualified to service Citi-group Family Office clients.
JOEL J. GUTH is an advisor with Citigroup Global Markets
Inc.’s Citigroup Family Office in Columbus, Ohio. Reach him at
(866) 464-2750.