Business owners know only too well the stresses associated with the day-to-day running of a small business. Small business owners may decide to sell or leave their business for various reasons. For instance, retirement, to move onto a new venture, for health reasons or to cut back on work hours.
Retirement is one of the more common reasons for selling a business. This can have several advantages.
Once the business is sold, the owner no longer needs to worry about it which can be a relief.
The proceeds from the sale of the business can be safely invested in a way that will ensure a sustained income for the remainder of the owner’s life.
Sometimes, however, it may be difficult to sell a business without the owner continuing to be involved. For example, if there is no professional management in the business, the buyer may want the former owner to stay on and operate the business for a fixed period of time.
If a business owner wants to retire, but doesn’t want to end his/ her involvement with the business, he/she might leave a family member or a partner running the business. The advantage here is continued involvement without the responsibility of dealing with the day-to-day problems of running the business.
However, there are some negative sides to such a scheme. The first is the practical consideration that many people will find it difficult to step back from a business that they have nurtured over the years, and leave decisions to others. If they fail to step back, then they are not really retiring and the family member or partner may become dissatisfied and frustrated.
Equally, many parents will find it difficult to properly assess their children’s management capabilities.
A professional appraisal of both the potential and existing capabilities of the children should be carried out.
This will benefit both the children (who should not be made responsible for something which is beyond their capabilities) and the parent (who may still be relying on income from a successful business).