Prepping for Retirement
On Sept. 26, 2018 at 10 a.m., Ron Haugen officially sold his shop, West Side Auto Pros, and stepped into retirement. The next task on his list? A plane ride down to Puerto Morelos, Mexico to start his new life in paradise ASAP.
But this transition didn’t just happen all on its own. Haugen remembers the exact date and time he sold the business only because a lot of planning and preparation went into it. Not only did he have to get himself ready for retirement, but he also had to get his manager, Joe Jerkins, ready to take it over, and it was a weight off of his shoulders once he did.
The former Ratchet+Wrench columnist gives his essential tips on transitioning from owner to retiree with ease and setting your successor up for, well, success.
As Told by Abby Patterson
Get the experts involved.
When you are getting ready to sell the business, anything that you agree on with the buyer needs to be in writing. In my case, I retained the building and drew up a new lease so it was in Joe’s name. This is why it’s important to have a business attorney helping you; we are car people, we aren’t experts in this field. When you have a kidney stone, you go see a urologist; it’s the same thing here.
There are companies out there that will put succession plans together, but I took a look at it and didn’t like some things about it. Instead, I hired a retirement business broker who had been helping business owners retire successfully for 20 years, a certified public accountant (CPA) accountant, and an attorney that specializes in business acquisitions in order to put together a plan. It took almost a year to put the original plan together; it was thorough and set him up for success and set me up for success, too.
Network with other retirees.
Early on, I talked to people in the industry retiring and heard about the cost of health insurance. When you turn 65, you are eligible to get on Medicare or Medicaid without paying for insurance. Right now, I have 10 to 11 years left before getting on these programs. Because of this, I built in a condition: the company will supply me with health insurance in exchange for a consulting agreement, which gives Joe the ability to access me via phone for X amount of hours with any questions or concerns he has regarding the business until I turn 65 and receive my own health insurance.
“I wanted to set Joe up for success, I didn’t just want to take the check and run.” - Ron Haugen, former owner of West Side Auto Pros
Preparing Your Successor
Get them involved in a 20 Group.
At one point in my career, I was in a 20 Group, RLO Training, for nine years. I knew the value of being in a 20 Group and for that reason, after we put the succession plan together and launched it, I told Joe he needed to be a part of one in order to have resources and people in place when he needed it. However, I left it up to him on which 20 Group he would join. So, he did his research and decided on the Automotive Training Institute (ATI).
Let them take the lead.
Leading up to the transition period, he was the manager and ran it day to day. Joe had hired a lot of the people that worked there and his focus was always on sales and profitability, but one of the things he was never really focused on in operations was the expense side. No, not the cost of parts or labor, but the cost of utilities, office supplies, trash removal, etc. I backed off from these tasks completely and turned the responsibility over to him because he has to know it like the back of his hand. It was amazing having a new set of eyes on this. By having him become involved in the expenditure side of things, it came up with a lot of savings for the business, and it made him feel like an owner and took pride in this task.