Like most long-term goals, planning to retire from self-employment takes a bit of time and planning to get right, from sorting out a pension, to working out what to do with the company.
There are lots of options to choose from once you’re ready to step back. In this article we’ll go through some of the possibilities, what to consider, and who you might need to tell.
Developing your exit strategy for retirement
All that hard work to build your own company can translate into a serious emotional attachment. Whether you’re struggling with the idea or raring to go, an exit strategy will help you work out what you want to do with your business, and the best way to step away from the role and transition into retirement.
This might involve simply closing the company down, selling it, handing over to someone else, retaining a smaller role, or something else. Your plan might evolve over time, but having some sort of exit strategy in place will help you minimise any uncomfortable surprises.
Do I need to create a succession plan?
Putting together a succession plan is the process of deciding who will take your place running the business once you leave. This might be particularly relevant if you’re looking to retire from an active role in the company but will continue to have some input (or a financial interest!) in it.
Assess the impact of your role within the business, and use this to help you start planning how it will function without you. This might involve leadership training for a member of staff, or increasing their exposure to more technical projects. Educating the next generation is important whatever the scale of your operation.
Beyond that, you might be able to sell your share back to the company or another shareholder, or to someone else entirely. Sometimes also known as a ‘disposal’, selling your business can be a way for it to continue – and the sale might also mean extra money for your retirement fund.
You’ll also need to let Companies House know about any changes to the company’s ownership and structure.
Pass it onto somebody else
Again, this might be an existing partner who already knows the ins and outs of the business, a family member, or an employee. Even though there might not be a ‘sale’ as such, you may find that you need to run it past anyone else already involved in the business, and record the transfer of ownership with Companies House.
Close it down
You might decide that you just want to stop trading and close the business. Like most big decisions, the process for this partly depends on:
Whether or not there are other people involved with running and owning the business
If the company is solvent or insolvent when you come to close