Answer: Nearly all of the 6 common exit strategies for contractors require the business to continue being successful for the outgoing owner to get paid. There are a couple of things that can be done to help ensure everything stays on track.
- Have a clear plan for your retirement, knowing exactly what you need and by when. As this question is mostly about the financial side of the plan, this is what is critical.
- Part of that plan must include what will be done in a couple critical scenarios.
- If the business has a bad year and can't afford paying you for 1-2 years.
- If the business is heading down a path toward failure
- Have simple reporting structures and the equivalent of “loan covenants” built in that will trigger you well in advance of either of these two scenarios.
- 4. The best insurance against these is turning the business over to a management team with the right capabilities who you trust and who trust each other.
This is Part 14 of a 15-Part Series
Topics Covered in the Series Include:
- Transferring Your Knowledge to the Team
- Future Vision for Your Company
- Communicating Family Succession Plans
- Issues Specific to Contractors
- Post-Retirement Business Involvement
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