A Contrarian's View on Retiring: Don't Do It

By Donald J. Jonovic

If a business owner retires at 65, plays 18 holes of golf a day, 365 days a year, until the day the actuaries predict he'll join the Eternal Cash Flow, he'll have to flog 660,000 golf balls off the ends of his clubs. I doubt even Arnold Palmer could survive a "retirement" like that, and yet that's how many business owners I know actually picture themselves spending their time.

I have a friend, the owner of a machine tool business, who plans to fish when he hangs up his abacus. He's a bass fisherman and has a shiny new bass boat that he keeps on his shop floor, protected by the type of velvet cords used in banks. See, he never gets the time to make it to his place in Michigan, but he will. As soon as he retires. I often wonder how many casts into the lily pads it will take before his butt goes permanently flat from the seat in that boat.

My advice about retirement is: Don't do it. Don't even consider it. I know I never will. That would just raise people's hopes uselessly, mostly our own.

In addition to the fact that we won't know what to do with ourselves, our spouses will surely go into shock at having our full-time companionship around the house. Besides, the business can't really afford to lose our 30, 40, or even 50 years of knowledge and experience.

Any successors who might be surreptitiously reading this article will be tempted to shred it before the boss sees it, but don't. Bear with me.

As far as 1 can see, there are usually only two potential outcomes of full-scale retirement by a business owner. Outcome No.1 we have all seen: A perfectly healthy specimen of economic success takes to sipping mint juleps from a rocker. Six months later, he's gone. Coincidence? I doubt it.

There's another bad outcome, however. The old guy might live. I'm reminded of a business owner, 72, who walked into his son's office one day, threw the kid his keys, and said, "It's all yours. I'm outta here." This was the first the kid had heard about any retirement. But, indeed, Dad left. He sold his home in Detroit and moved to Scottsdale-sun, sagebrush, and colorful golf knickers. The son, plunged in a cold business bath, struggled for two years to get his feet on the ground and succeeded.

"I'm getting an idea why Dad loved this business so much," be told me. "It still scares the wits out of me, but watching something that you try actually work is an experience that can't be matched."

About three years after Dad left the business, however, I got a call in the middle of the night from this young successor. After a few moments of heavy breathing, he succinctly defined Outcome No. 2: "He's back!"

Too many golf balls, tumbleweeds, air conditioner repairmen, and friends who forgot where they parked the car had worn down his enthusiasm. Dad pined for excitement, a place to go, something productive to do. Then it hit him: 'Thank God I still have the business."

The only problem with this hang-in-there-to-the-bitter-end idea is that we can too easily become barnacles on the posterior of progress. The fact is that we all eventually become ineffective at the things we do best. Think about this: When did we make some of the best decisions of our lives? Wasn't it back when we were too dumb and inexperienced to know we couldn't do what we decided to do? What the business needs is the input of younger people too dumb to know what they can't do. Think about this, too: Weren't those "inexperienced" years also the time we had the most fun?

Why not recreate those years? Move on to something new. The owner of a business that distributes storefront window systems once came up to me after a talk and introduced me to his three sons, who were taking over his business. He seemed to be in his mid-fifties, so naturally I asked him about his plans. "Well, I'm retiring," he said. "You're awfully young," I said.

He went on to explain that he'd come across a fellow who had invented a new skylight design he was having trouble marketing. "It's a great design," my friend said, "and I'm going to set up a distribution network for him for a piece of the action. This way I can keep involved with the business, while staying out of the boys' hair. I can use my contacts and our name to build distribution, but still only work part time. The rest of the time, my wife and I are going to do all that traveling we've never done."

It sounded sensible to me. When I ran into him a few years later, however, he said his retirement plan was a failure. "What happened?" I asked. "Did the skylight leak?"

"No," he replied. "The skylight works better than I thought. The problem is, the skylight division now does twice the dollar volume of my original business. I have to retire all over again!"

Donald Jonovic, founder of Cleveland's Family Business Management Services, is author of the book, "Someday It'll All Be Yours ... Or Will It?"

Article categories: 
Print / Download
Issue: 
June 1990

OTHER RELATED ARTICLES

  • Haws Corporation family governance builders

    Haws, based in Sparks, Nev., and part of Traynor Family Enterprise, was founded in 1906 with the invention of the drinking fountain. The company today provides hy...

  • Trustees must build rapport with younger beneficiaries

    When 28-year-old Brady lost his mother to a sudden illness, in addition to grief and loss came questions about how to manage a large trust created by his mother. The mother’s estate plan distribu...

  • Family cleaning brand remains untarnished

    Alison Gutterman does not like to clean. Some people do, she realizes, but she’s not one of them. That’s funny, because her family owns Jelmar, the Skokie, Ill.-based company behind CLR and Rus...

  • Tips on interviewing financial advisers

    Do your homework
    • Determine your advisory needs. Do you require financial planning, estate planning and trust services? Will you need lending, insurance, philanthropic and ta...