Retirement is a date, not an exit plan

If you sold the business tomorrow, what would you do at nine o'clock the following Tuesday?

Not on holiday. Not the first fortnight, when everything feels like a long weekend. An ordinary Tuesday, three months later, when nobody needs you to sign anything.

Most owners near retirement have thought hard about the price and the timing. Very few have thought about that Tuesday. Retiring from your business gets planned as an event, when for the owner it is a change of life, and the two need different plans.

It is a common gap, and it costs more than people expect. Owners who cannot picture life after the business tend to delay the sale, undermine the handover or come back.

Plan the life after before you plan retiring from your business

Plan the years after the sale with the same care as the sale itself, and rehearse them while you still own the business.

Here is the mechanism. A business that depends on you will only let you go if you have practised leaving, and you will only leave properly if there is something to go to. Buyers see the first half. As I have written before, nobody can buy a business that is you. The second half is yours alone.

In practice that means stepping back in stages over three or so years. Take a full month away and see what breaks. Hand over a whole area, such as purchasing or rostering, not just tasks within it. Move from running the week to reviewing the month. Each step tests the business without you and tests you without the business.

Alongside it, write a plan for your own week. What you will do with mornings. Who you will see. Which work, if any, you want to keep: a board seat, mentoring, a smaller venture. How much money you need each year, worked out with your accountant and a licensed financial adviser rather than guessed.

Expect the buyer to ask you to stay on for a handover period, sometimes with part of the price tied to results. Plan for that period as a role with an end date, not an open invitation.

Some owners simply want to stop. They are tired, and the idea of planning a retirement sounds like more work. Fair enough. Stopping is a perfectly good plan, as long as it is a decision rather than a default, and as long as the business has been taught to run without you before the sale.

Planned, retirement is a place you arrive. Unplanned, it is a room you keep walking out of.

Howard Schultz kept coming back to Starbucks

Howard Schultz stepped down as chief executive of Starbucks in 2000 and stayed on as chairman. In January 2008, with the share price down by about half over a year, he returned as chief executive, telling investors he was taking the role for the long term.

He handed over to Kevin Johnson in 2017. In March 2022, when Johnson announced his retirement, Schultz came back a third time as interim chief executive on a salary of $1. "Although I did not plan to return to Starbucks," he said, the company had to transform again. He handed over to Laxman Narasimhan on 20 March 2023 and stayed on the board.

Plenty of people see the returns as a founder rescuing his company. Each one may well have been the right call for Starbucks at the time.

The detail worth noticing is the pattern. Three departures, each one a title changing hands while the founder remained within reach. A business that keeps its founder close keeps the option of calling him back, and a founder who stays close keeps the option of answering.

Most owners do not have a board to ask them back. They come back on their own, through a buyer's phone call, a sinking business or an empty week.

Why I am recommending it

I plan what comes next before I step back from anything.

My first job was at fourteen, washing cars for $20 a day. I have been working ever since. That is a long time for work to be the thing that fills the day, and no sale hands that part over.

So I treat the life after as part of the exit, not as an afterthought to it. The question is not only who takes over the business. It is what takes over the hours.

No plan makes the change painless. A plan does make it a change you chose.

Do this before Sunday

Write out the Tuesday three months after a sale, hour by hour, from waking up to dinner.

Show it to your partner before Sunday and ask whether it sounds like a life they would recognise. The gaps they point to are the first things to plan.