The Top 10 Excuses for Not Letting Go
Two advisors explode some of the myths about retirement…with apologies to David Letterman.
Challenged to “let go” by members of the younger generation, many senior business owners come up with creative excuses for staying in the saddle. We've organized the excuses we hear most often into a Top Ten that probably would have amused David Letterman in the years when he was waiting for Johnny to retire, in hope of succeeding him on the Tonight show.
The Top Ten may elicit chuckles, and our responses below will unsettle a few business owners who find them all too familiar. We're sorry, but someone had to do it. Without further ado, here's the list:
10. Too many people I've known have died soon after they retired (or act as if they did). There is no data documenting any correlation between mortality and retirement age. However, having something fun and exciting to look forward to after retirement may ease the anxiety and depression some people experience after giving up fulfilling careers. In other words, get a life.
9. Without me, the business is nothing. You need to whittle your ego down to a more realistic size. Under your successors, the business may evolve into something different; the kids may, in fact, run it into the ground, or they may unleash a period of unprecedented growth.
8. Without the business, I'm nothing. You need to pump up your ego to a more realistic size. Positive thinking, meditation, and singing at a karaoke bar may help shore up your self-esteem. If not, electro-shock therapy may be in order. You can change.
7. I hate gardening, and get sunburned if I play too much golf or tennis. So don't garden, and wear a high SPF sun-screen when engaging in outdoor sports. Or find activities you've always wanted to try but never had the time to do. Volunteer to serve meals at the homeless shelter. Or teach at an inner-city school.
6. I need someplace to go. My marriage vows were for better or for worse, but not for lunch. Don't make a strong marriage suffer because you have time on your hands and your spouse has a busy schedule. Go bungee jumping or sky diving. Go back to school and finish (or start) your degree. Or, if you want to do something really crazy, go into politics.
5. The kids want to change the way the business is run. If I'm not there, they will change it! If the business doesn't change and keep up with today's business pace, it may die regardless of you. If you inherited the business from a previous generation, you probably made some changes. And if you are the founder, everything you did at the start was a change. Perhaps the business sorely needs an infusion of fresh ideas and energy.
4. I have several capable kids and don't want to have to choose one to succeed me. Either let them duke it out among themselves or sell the business to an outside third party. Better yet, create a management team to run the business and challenge your kids to be partners and work together.
3. The business is my major source of income. I have to stay active to protect it. Today there is an array of strategies for turning your illiquid business into a steady income stream after you transfer it to successors. They range from salary continuation agreements to stock redemption plans that allow you to sell shares back to the company when you retire. In addition, the transfer agreement can have built-in safeguards that allow you to step back into the business—or sell it—if your successors do not, for example, maintain adequate cash flow coverage or specified debt/equity ratios.
2. Nobody can run the business as well as I can. It may come as a surprise, but you're not the only one running your company. You make major decisions, yes. But you can hardly manage every little detail. Step back and look around. You may see untapped potential all around you.
1. Somebody may run the business better than I do. And what's wrong with that? Don't you want the business to thrive, in order to ensure a steady retirement income for you and keep your successors off the street? Why should that decimate your ego? If the business survives, you have created a legacy—not an easy feat these days.
Obviously, these excuses spring from real fears about loss of financial security and sense of personal identity. It helps to lighten up. Some owners have an exaggerated need for control, or they are still trying to prove something to a long-deceased parent, or they have simply failed to make any plans for a satisfying and fulfilling retirement. We'd like to see aging businesses owners face the financial and emotional roots of their resistance to passing the torch. These are valid issues, tough ones at that. But there are effective solutions, which we hope they will see once they get past the smokescreen of the Top Ten.
Mike Cohn is president of The Cohn Financial Group in Phoenix, consultants specializing in ownership succession and wealth transfer. Ernest Doud, of Doud-Hausner Associates in Burbank, CA, is a family business consultant specializing in management succession.