The reflective period ushered in by the turn of the year, may be just what you, and your business, needs.
The pace of life slows down, and there’s a break from routine. This gives opportunity for introspection. Many business owners consider changes for the year to come. A myriad reasons accompany such thoughts, a primary one being time.
Silver Tsunami
The festive season can be a reminder “life is what happens when you are busy making other plans”. This applies to all, but may be most pertinent to those approaching retirement.
“Time waits for no man”
There is a growing “silver tsunami” of late baby boomers/early gen Xs who have spent their lives building small businesses. Yet having created the means to enjoy a comfortable retirement, now find themselves unsure how best to embrace this freedom.
Who is important to you
This time of year shines a spotlight on the importance of family, friends, and community. All can be key factors in people rethinking their priorities.
However for business owners this community extends to their employees, and a sense of responsibility to staff can make an exit strategy seem complicated. Could your retirement plunge staff into the unknown and give rise to uncertainty over the future direction of the company? Both may be unpalatable outcomes.
Ironically, the years spent working to achieve freedom, can create an environment in which business owners feel trapped.
Employee Ownership
EO can help remove these barriers. Enabling you to step away from the business whilst also safeguarding your team, the business, and creating a meaningful legacy.
The Employee Ownership Trust (EOT) is a relatively stress-free solution, which also offers considerable tax benefits. Plus you can retain a stake in the company if you favour a more gradual retirement from the business.
Maslins Chartered Tax Advisers
Go EO’s founder Chris Maslin did done just this. In 2021, he sold what was his imaginatively named accountancy firm Maslins to an EOT. Having seen the benefits first hand, he set up Go EO to help other small businesses transition to Employee Ownership simply and affordably.
“An Employee Ownership Trust seemed a great way for me to step back from the business, whilst rewarding the team who helped make it succeed. Placing the company’s future in the hands of the team who run it. In so many ways it just felt right.”
Kudos Records
The founder of publishing company Kudos Records thought there were only two choices when planning their retirement strategy:
- a trade sale, or
- winding the company up
The former would have likely meant rationalisation, and did not sit with the owner’s beliefs. The latter was considered unnecessarily destructive. Neither appealed!
As CEO and founder, Danny Ryan explains, “An EOT felt like the perfect solution. It enables me to realise a fair value for the business over time, while gradually extracting myself from running it day to day. I’ve personally committed to 5 years (minimum) which should give us enough time to transition”.
Coupled with the benefits above, Danny is also now enjoying some of the other benefits an EOT delivers – increased transparency, and a highly motivated, engaged team, with whom he can share the burden of difficult decisions.
If the clarion call of ‘New Year, New You’ has reinforced prioritising your retirement, Employee Ownership could provide the solution you are looking for. Enabling you to step away at the right time, in the right way, and with the right results, for all involved.
Summary
EOTs won’t be right for every founder/business. But they should certainly be an option considered in the mix.
Go EO have helped businesses in a wide variety of industries/sectors transition to an Employee Ownership Trust model. For the founders, motives/plans are different:
- Short term exit plan.
- Gradual drift towards retirement.
- Gradual drift to doing something new.
- No change in their role/focus, just a change in company ownership.
Whilst there are certainly some best practices when it comes to Employee Ownership, what the founder does post sale has a lot of scope for personal preference. It certainly doesn’t have to be a sudden, clean exit.
What resolutions are you making for your business? Could a change in ownership be part of it?
If you are interested in finding out more about transitioning to an EOT, get in touch with us at Go EO to see how we can help.