You’ve probably heard of The Great Resignation – but in 2022, PieLAB will be focused on facilitating The Great Retirement.
Originally coined by Professor Anthony Klotz of Texas A&M University, who predicted a mass exodus of resignations in response to the COVID-19 pandemic, the much-ballyhooed Great Resignation has seen workers leaving their jobs in droves to pursue more meaningful, flexible and rewarding opportunities.
What’s received less attention – but is of even greater interest to us at PieLAB – is The Great Retirement, a silver tsunami of Baby Boomers leaving the workforce.
It’s not surprising that the pandemic would lead to some significant self-reflection for seasoned workers. After roughly four decades at the coalface, they’ve had to slow down and isolate at home for both work and health reasons, and this has given Baby Boomers a chance to think about what’s really important to them in the current stage of their lives.
Many of them seem to be coming to the realisation that they can lead a happier and more fulfilled life by leaving the daily grind behind. The Pew Research Centre found that in 2020, the number of retired Baby Boomers increased at more than twice the rate of the previous year.
Similarly, Clarefeld | Citizens Private Wealth (CCPW) conducted a survey of 150 high- and ultra-high-net-worth business owners, and found that the pandemic had led a large majority (66 per cent) of respondents to speed up their plans to retire or sell their business.
A recent survey by Coventry showed that the exodus is accelerating, with 75 per cent of respondents planning to retire early.
How PieLAB can help you navigate The Great Retirement
Baby Boomers are highly entrepreneurial. In fact, 55 to 64-year-olds form businesses at the highest rate of any age group. If you’re a Boomer who owns your own business, ‘retirement’ doesn’t just mean someone throws you a party and gifts you a gold pocket watch. It means deciding what to do with the business you’ve probably spent decades building.
For many business owners without a succession plan in place, selling to a competitor can seem like the obvious answer. But it’s often not the ideal answer if you genuinely care about the people who currently work for you, because a competitor will often seek to merge your business with theirs, sacking some of your staff in the process. It will also result in your business’ brand and reputation, that you’ve spent years building, disappearing forever.
That’s where PieLAB can help. We invest in and acquire great businesses for the long haul, and our ideal partner is a business owner who would like to step back or step out of their business, either straight away, or over a period of time.
It’s not surprising that the pandemic would lead to some significant self-reflection for seasoned workers ... this has given Baby Boomers a chance to think about what’s really important to them in the current stage of their lives.
We make your transition to retirement easy by developing your team and helping them to step up, ensuring your business continues to run the way you’re used to – only better.
You also don’t have to sell your business outright. Instead, we can help you reduce your financial exposure to the business by selling down some of your shareholding, while you remain involved on a part-time basis, which often improves your cash income during retirement and also has positive tax outcomes.
For instance, let’s say you own a business generating one million dollars in profit a year. You can probably sell that business outright for five million dollars. Once you pay tax on that lump sum, you’ll be down to about four million dollars. You could then invest that four million dollars in the stock market, where at best you’ll get a five per cent cash return – that’s $200,000 a year.
But before you sold your business outright, you were making $1 million a year, so your income has suddenly reduced by 80 per cent. Now that may be some pretty rough maths, but the truth is, you’ll most likely be generating a lot less cash return once you sell your business and retire.
In reality, there’s probably only one place where you can invest your money and get the same type of returns you were getting when you ran your own business – and that’s by keeping some of your funds in your business.
And that doesn’t mean you have to keep giving your business your full, undivided attention. At PieLAB we’ve worked with dozens of businesses as they’ve gone through the process of a founder handing over the reins to a new CEO. We’ll help grow and upskill your people, or recruit new people, so that the business can effectively run itself without your full-time oversight.
You can remain involved and continue to have input – you could become a Board member, for example – while still getting back hours in your day and beginning to enjoy the more balanced lifestyle you deserve.
That way, you can take some of your money out of the business now to help you enjoy your transition into retirement, while leaving some of your money in the business, so you can continue to enjoy the high annual returns that you wouldn’t be able to get anywhere else.
Of course, we can also help you to sell outright – or help you sell some equity to your current management team – if that’s what you’d prefer.
But if the only thing stopping you from stepping back or stepping out of your business is your concern for how the business would be run in your absence, or what would happen to your people, then it’s time to take that burden off your shoulders and explore the options you didn’t know existed.
The Great Retirement could be closer than you think.
If you think your business could be ready to join PieLAB’s portfolio, get in touch with the team today.