Q: I am 60 years old and looking forward to my retirement. Thirty years ago, I started a grocery, to provide a ready-made business for my children when they grow up. It now has four outlets. However, none of my three children—the eldest is now 30 (the same age when I started the grocery)—wants to take over, as they have their own careers. I am thinking of just closing my business, even if all the outlets are in good shape. What do you think? How do I go about shutting it down the right way?
A: It is perhaps too early to give up on your children, as they are still relatively young in their careers. While it is good that you have given them the freedom to choose their occupation, you could try to soft sell your business to them. Discuss your plans to retire someday, but don’t burden them with expectations—it should be an offer that they could discuss among themselves.
1. Let your children gain experience elsewhere.
It actually helps that your children work for other companies at first. In fact, the longer they spend in the corporate world, the better. When they finally take over your business, they will have more credibility and experience, although their management style may be radically different from yours.
2. Expose your potential successor.
Identify who among your children has shown interest in the business and has the potential of running it someday. Don’t ask him to resign from his current job, but slowly expose him to managing the business. Ask him to join you every weekend when you visit your outlets and explain to him how you do the operations and other relevant functions.
3. Hire a competent manager.
Hire a manager or check if anyone in your current roster could be promoted to manager—someone not only competent, but trustworthy and loyal, too. He could help train your children when they do decide to join you. Ideally, your children should start at the bottom and get real-time training in all aspects of the business. They should not report directly to you. Assign your manager to mentor and guide your children as they move up the organization.
4. Build a professional team.
If none of your children is really interested in taking over, continue to run the business under the leadership of your manager. Develop a competent management team to take care of operations and report to you. (Later on, invite your children to join you in the board. They could help you review the business, particularly the financials, monthly.) There is no sense closing the business if it is operating profitably. Instead, increase its value, continue to expand it, albeit organically, until you find the opportunity to sell it.
5. Sell the business and turn consultant.
You can sell your profitable business at a very good price. As a legacy, have an agreement with your buyer to retain your brand. They can keep the company history with you as founder. If you still want to be involved, you could be hired as your buyer’s consultant to ensure continuity. Meanwhile, you can enjoy your retirement using the proceeds from the sale, without counting on your children for financial support.
Henry C. Ong, CMA, RFP, is president and COO of Business Sense Inc. (www.businesssense.com.ph ), a financial advisory and consulting firm. He may be reached at email@example.com .
Illustration: Getty Images
This story was originally published in the October 2013 issue of Entrepreneur magazine.