Retirement is not far away—especially for members of the Baby Boomer generation. This may be a threatening reality, as working for or owning a business is an inextricable part of many Americans’ lives.

With more than 60 percent of privately held small businesses owned by Baby Boomers, there is expected to be a massive exodus in the workforce within the next few years.

Some retiring Baby Boomers will decide to sell their business, though this process can prove to be difficult and be sometimes emotional. Oftentimes, business owners spend decades building their company from the ground, up. They want to ensure that their employees, who have dedicated years to the business, are sufficiently cared for before any transition takes place. But what happens when owners don’t want to sell their business, and don’t intend to let it go?

When approaching retirement, Baby Boomers must confront a tough decision. The reality for most business owners is that it’s nearly impossible to have your cake and eat it, too. While no owner wants to leave the company that he/she has developed and invested in for years, it is an inevitable event in the life of a business.

The silver lining, however, is that it is indeed possible to plan the succession of your business in a way that fulfills your vision and objectives. In this sense, Baby Boomers can in fact enjoy their “cake,” or the fruits of their business, during retirement.

Want to know how you can still be involved in your business even after you’ve retired?

There are a number of elements you can integrate into your succession strategy to allow you to still retire, but not from your business. A few approaches that have worked for our clients include:

  • Transferring: The retiring owner transfers control to a group of key managers capable of running the business in the owner’s absence, who understand the benefit of having the owner around in a lesser capacity. This permits the retiring business owner to be involved for as much (or as little) as he/she wants, while knowing that the company is in good hands.
  • Deferring: The retiring owner opts out of transferring his/her equity in the company, using the profits to fund incentive and retention bonus plans (phantom stock, deferred compensation, golden handcuffs, etc.) This ensures the ongoing commitment of the management team and allows the owner to continue to receive the financial benefits of ownership. This approach is particularly attractive when the members of the management team are not attracted to the “risks” associated with ownership.

Both of these scenarios—and others like them—require a committed management team that has the appropriate knowledge, skills and experience to run the business in the owner’s absence. Additionally, having the company’s long-term strategic objectives established in advance of implementing these arrangements is also important to ensure alignment between the managers and the owner, who is looking to spend less time mired in day-to-day operations.

For more information on how you, as a Baby Boomer, can have the best of both retirement and owning a business as you enter your later years in life, contact Legacy Business Advisors Mid-Atlantic. Our team of experienced advisors are here to help you.