A successful business succession starts long before the current small business owner’s retirement. As you begin planning for your sunset from your business, don’t forget the books. Prepare your business finances for retirement ahead of time, so your successor will have the resources they need to ensure your legacy.

Build Your Own Retirement Portfolio

Small business owners are used to riding the tides with their business. When the company is flush, they may take an extra bonus or increase their disbursements. When times are hard, they know they can dip into their personal savings if they have to.

Retirement means cutting the cords between your personal wealth and your business’s bank accounts. Many small business owners neglect their personal retirement investments in favor of growing the business. This choice can make it hard to step away when your health, or your life plan, say it is time to retire. Long before you reach retirement age, you should be making strategic investments into retirement accounts such as SEP IRAs, SIMPLE IRAs, or Solo 401(k) accounts to build wealth outside your business that you can use after retirement.

Know What Your Business is Worth

Some business owners plan to pay for their retirement out of the sale of the business. Unfortunately, entrepreneurs are often wildly inaccurate in estimating the value of their businesses. A professional business appraiser can help you set the true value of your business now and predict its future growth.

A professional business valuation helps owners more realistically plan for their futures (including the tax implications of capital gains). By having an outsider review your books, you can prepare your business finances for the retirement sale. It is also helpful in family businesses or other closely held companies where the next owners are already on the payroll. Giving these successors access to a business valuation early will allow them to prepare their own finances to purchase the business when it is time.

Get Help Preparing Your Business Finances for Retirement


Contact a business succession coach to help ensure your company is ready when you step away. [gravityform id=”12″ title=”false” description=”false”]

Prepare Your Business’s Finances for Retirement of Its CEO

Whenever there is a transfer of management, your bottom line will be affected. However, proactively budgeting for the related expenses can help lessen the blow. Be sure to account for:

  • Executive Recruitment Costs: If you are hiring a replacement CEO, work with a recruiter to find someone who suits your vision for the company.
  • Overlapping Salaries: In most business succession plans, there is an overlap where you, the retiring CEO train up your replacement and introduce them to staff and key customers. Be prepared to pay two executive salaries in the lead-up to your retirement.
  • Market-Rate Compensation: Your replacement won’t have the same passion for your business as you did while you were growing it. They will expect to be compensated at going market rates in your industry and geographic area.
  • Personnel Costs: Some of your employees will see your exit as a sign it is time for something new. You should be prepared to offer key staff members bonuses to stay on, additional benefits, and possibly raises. You will also need to anticipate hiring replacements for those who choose to leave anyway.

Plan the Transfer of Ownership

You may keep your ownership of the company well into retirement. You might continue to act as the company’s board chair, or as a silent partner. In any case, your business will benefit from being intentional about when and how the ownership transfer happens. This might happen in a direct sale, an inheritance in your will or estate plan, or your new CEO’s interest might vest over time. Discuss these options with your business consultant and your attorney to work out an arrangement that makes sense for your company and your personal financial interests.

Hire a Succession Planning Coach to Manage the Process

There are many factors to preparing your business finances for retirement. When you add those considerations to your everyday tasks as CEO, details can easily fall through the cracks. Instead, consider bringing on a business succession coach to help you plan your transition into retirement. This same coach can provide continuity to your business by serving as an executive coach for your replacement, ensuring that the company’s vision doesn’t leave when you do.


David Stanislaw is an organizational development specialist with over 25 years’ experience helping business owners plan for the future. Through business succession planning and executive coaching, David helps businesses through transition to new leadership after their owners retire. Contact us to meet with David to start building your family business succession plan today.