What Is Exciting About Transitioning to a Valuable Life?

A few decades, ago you were going into retirement thinking it was the end of life. Could you make it valuable? Should you rather consider this as starting a new chapter in life?

During our entire lives, we are used to a long succession of “Starters”. Starting school, coming back from holiday, starting in a new company, moving into a new home, etc. And one day we suddenly face the end time. The big exit. The retirement. A pivotal year in which our daily routine drastically changes. The abandonment of the professional life is not as simple as it seems. “Letting Go” is sometimes complicated. How should you prepare yourself for a healthy retirement?  How should you think about it? How can you prepare it? How can you anticipate what this new venture will be?

In 2017, this upstream preparation is crucial. Some “coaches” are specialising in this matter. Summer periods are always conducive to retirement

Serge Guérin, a sociologist, specialised in ageing within the society, says a lot changed in the head of pensioners over the last decades:

 In the past, retirement was far from having the positive connotations of today. At the time, it was the end of the story. It was just a  bonus time in your life. Exiting your professional life was not considered a slice of your entire lives. Life was only work and career. One could think that in the “glorious 30” prosperity was imperturbable, but it was also a time where you worked longer and more harshly, over 45 hours per week! The average life expectancy was 67 years old, and at best, you went into retirement at 65.

It is not before the mid-1970s that pension has been an integral part of our career. At this time the notion of the “pre-retirement” has also been introduced, the consensus was that it should not happen before you reached 55. The message was “give way to young people.”.  Everybody, business owners, unions, thought that it was an excellent idea. In the early 1980s, the retirement age reduced  It resulted in several employees learning that from one day to another they could retire early. They had no chance to anticipate or prepare for such a significant change; it came as a big surprise!

During that same period, life expectancy has begun to increase but people that retired at the time did not know that they will live longer than the previous generation. Everything had to be reinvented retirement time became longer so how would the new retirees occupy their time, what should be their new status in the society?

To add to the complexity, In 2004 a new phenomenon happened It was the beginning of a long wave of baby boomers retirement.  It is then that retirement became a new adventure with a vast field of possibilities, call “the afternoon of life.” A new notion of the “youngish-ism”  this wave, our society is inciting us to remain young at any cost, regardless of age! We are overvaluing Youth. Pensioners are therefore more than ever committed to staying active in charitable associations, educations you named it! Some even become serial entrepreneurs.

In the next 5 to 10 years the pensioners will experiment a loss of purchasing power which could lead to challenging situations. In 2019, the state pension age will start to increase for both men and women to reach 66 by 2020. The Government is planning further increases, which will raise the state pension age from 66 to 67 between 2026 and 2028. The pensioners should reinvent the way they will use their time in a logic of self-production to make way to an economy of territory, frugality, less waste. The retirees’ world will start lobbying the politics, so their social and economic role in the society will be more and more valued

How should you prepare yourself for exiting your business?

There’s no shortage of things to keep you awake at night when you decide to transition out of your business.

For some, it’s what you will do when you stop working. For others, it’s the prospect of losing your business people status, but your primary concern is to find out if you would be able to keep the same lifestyle you are enjoying now in retirement.

Matching your personal goals to your business goals will help you to figure out your magic number – the sum of money required in today’s terms to ensure that you meet your personal goals. It is the peace of mind that you will never run out of money during your lifetime regarding of any events thrown at you. It is a three-stage approach the why am I doing it, can I do it, when should I do it:

 Why?

  • Create family legacy
  • Reward loyal employees
  • Stay involved in business
  • Fund retirement lifestyle
  • Enjoy more spare time
  • Reduce stress

Can I?

  • Can I afford to sell my shares outright and take a lump sum option with no further involvement?
  • What further income, if any, do I need from the business after today?
  • Can I afford to give the business to my family at fair value?
  • What is the lowest possible amount I can accept for my business?

When? How much is enough?

  • You should Forecast your Cashflow considering your business and personal assets.
  • The forecast should be built on reasoned assumptions to have a clear view of your financial future – bringing all parts of your life together.
  • The purpose for the forecast is to highlight shortfalls in current and future position, quantify it, and realise the impact.
  • You may decide to enhance the value of your business before retiring to avoid running out of money or endlessly accumulating it at the expense of your desired lifestyle.

Continuous preparation

Nowhere is that truer than in combat. In fact, we often say that war is the realm of uncertainty. So how do soldiers prepare for it? Lt Col Steven Gventer who was in the eastern Baghdad district of Sadr City in Iraq during the siege of 2004, when Shia militia staged an uprising against coalition forces says:

“One of the things we try to do is to cut down on the number of variables that we don’t understand, or we haven’t prepared for it. To minimise the number of variables that might hurt us.”

What is the process of continuity planning? What should be your thought process?

Planning an exit requires new skills and a different perspective than running your business, it is, seeing it from a possible buyer viewpoint. It can be paralysing to look at such a big challenge, so you should break it into bite-sized. One daunting task turns into 12 easy steps:

  • Define your personal and business goals
  • Create three teams: Family, Business, Experts
  • Review your financial situation: Insurances, pension, etc.
  • Find out the estimated value of your company and plan the value enhancement tweaks required to help you meet your goals
  • Understand your exit options
  • Implement the plan to maximise the value of the business
  • Review the legal aspect of the business to make sure that you will not have last minutes’ glitches when you decide to pass the baton
  • Maximise and plan taxes; capital gain, income and inheritance
  • Optimise your estate
  • Prepare the after business
  • Communicate to all stakeholders
  • Manage the transition

Build your retirement story:

Stories serve a purpose, particularly when it comes to decision-making so start creating your tale after exiting your business:

It is imperative for you to plan long before leaving the company what you will do to keep an active and enjoyable life. Maybe you want to be involved with charity, become a non-executive director, start a new hobby such as wood-working or sailing in the Mediterranean Sea. If the cost of the new activity has not been included in your plan early enough, you may find yourself short of cash to fulfil your aspirations and make your dreams come true

Imagine the possibilities:

The first step consists of turning nothing into something – starting with ideas and imagination. Now it’s hard to call imagination and ideas nothing. How real are ideas and vision? It’s a bit of a mystery. An idea is not tangible as it is not real, but it is almost real. So, you would have to turn your exit idea into something that becomes so powerful in your mind and consciousness that it seems real to you before it becomes tangible. Something that is so present in your mind that you can see it.

If your idea is to build a home for your family in Florida, you would have to take your family to the place you want to build the house and bring them on tour through the house. Is that possible? Is it possible to take someone on tour through an imaginary house? the answer is yes. You should visualise where things would be and say “This is the three-car garage!” And the family will look and say, “Yes! This garage will hold three cars!” you have to make it real and bring it to life. “Here’s the rest of the house. Here’s the kitchen with this view out of the window.” And they would look out of the window. One day you will make this house so real that every member of the family will see his or her place. Imagination is so right it’s almost real.

Imagine that what is possible is possible for your doubts to rest:

You should think that what you imagine is possible for you and your family. You will believe because people will tell you I have done it so you can do it! You will believe because of your self-testimonials. Here’s what your testimonial might say, “If I have been able to manage a business all my life and make it real, I can manage my retirement.” These two things are compelling — although they are not yet real, they are very close.

Can your business survive without you?

Take the free mini value builder test

If you wish to build up the value of your business and would want to explore what you could do to make it sellable, please do not hesitate to call Jean-Bertrand de Lartigue on +44 1656 766 363 or email him, jb@exit-planning.co.uk

Comments

Chris Pehura says:

All these points resonate with me. The only thing I can say is to live your plan on a daily basis. Know what your spending time on and how that contributes to your long term plan. While doing that, make sure you do some recreation so you won’t have faulty plumbing when you do retire.

Thanks for your insightful comments Chris. I agree with you need to reach retirement age in good health if you want to enjoy your new life!

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