Without an exit strategy, remodelers may find retiring as difficult as staying in business. Among those on our Panel, few have planned a way out. Remodeler Robbie Robinson is learning that if you expect your business to help pay for your retirement, you'd better plan ahead.
Robinson, 71, hoped to retire this year and pass on his repair and home inspection business to his stepson and lead carpenter. He began training the two for management last year.
"We figured by the end of the year we'd be able to have them up and running. But so far, it isn't going that well," Robinson says.
Before deciding to pass it on, Robinson had planned to close down the company. But then the stock market tanked and wiped out his and his wife, Donna's, IRAs. Robinson has a pension from a prior job, but without the extra income from the remodeling business, he will have to sell his house. "I'm concerned," Robinson says. "I don't have the money in the bank I want to have at all."
Robinson wishes he had ensured his successors could keep the company running. "Unless they prove their worth," Robinson says, he may shutter the company and take the financial hit.
Unfortunately, Robinson's story is common. Though most contractors have some sort of financial provisions set up for their retirement, succession planning does not appear to be a priority.
| At what age do you plan to leave the business? |
| Don't plan to retire 22% |
| 65 or older 17% |
| 61-65 26% |
| 50-60 31% |
| Younger than 50 5% |
| What will happen to your business when you sell it or retire? |
|
Family member will take over 30%
|
| Will liquidate company through sale of assets 28% |
| Someone in the company will buy it 16% |
| Someone outside the company will buy it 13% |
| Heirs will work it out 6% |
| Other 6% |
|
Do you have a written strategy for exiting your business?
|
|
No 92%
|
|
Yes 6%
|
|
Unsure 7%
|
| Do you have any assets besides your remodeling business to support your retirement? |
| Yes 91% |
| No 9% |
| Have you prepared family members to manage the business if you die or are incapacitated? | |
|
71%
|
No |
|
23%
|
Yes |
|
6%
|
Doesn't apply |
| If not, have you identified non-family successors and planned for their training? | |
|
83%
|
No |
|
13%
|
Yes |
|
4%
|
Unsure |
| Do you have a buy/sell agreement with someone involved in your business? | |
|
88%
|
No |
|
10%
|
Yes |
|
1%
|
Unsure |
| Have you made provisions for retaining your management staff if you leave or sell the company? | |
|
86%
|
No |
|
11%
|
Yes |
|
4%
|
Unsure |
| Have you ever had your company evaluated for its worth? | |
|
95%
|
No |
|
3%
|
Yes |
|
2%
|
Unsure |
| Have you considered selling the company to employees through an employee stock ownership plan? | |
|
85%
|
No |
|
15%
|
Yes |
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