Triple Play is a weekly NJBIZ feature that asks top executives in New Jersey to talk about three things related to their industry.
Michael H. Karu is a member of the accounting firm Levine Jacobs & Company LLC with extensive experience assisting small business clients and valuing their businesses.
We asked Michael for three things to consider when a retirement-minded small business owner needs to choose a successor.
Business is business: Keep your emotions in check. This must be an objective decision. You’ve just made one of the most important decisions of your life to retire, so be objective. Choose the most qualified person, not necessarily a family member or most senior employee.
Develop a formal training plan and timetable for the transition: No one does your job as well as you, so be prepared for mistakes and coach your successor through them. Planning here is key. You set the tone, then step back and monitor the progress. Remember, you are an adviser and not the chief cook and bottle washer.
Determine the financial aspects: You’ve already made the hard decision; the rest is proper planning. Calculate your expectations, but have a proper business valuation done. While the two may not coincide, the value to be received needs to be affordable to the business paying it or you may wind up coming out of retirement.