Professionals who own successful companies or hold leadership positions at organizations are responsible for those companies. In addition to having a fiduciary duty to the organization and its shareholders, an executive or owner may have a sense of personal moral obligation to the company.
As a high-ranking executive starts preparing for retirement, they may need to consider financial statement business. In some cases, the company could be on the cusp of insolvency. A difficult transition might be all it takes to push the company into the red. For some executives and owners, addressing financial obligations can be an important part of preparing for retirement.
Is the company still profitable?
Executives and owners preparing to name successors typically want to ensure that the people taking over their roles can help the company thrive. Reviewing current finances to determine if the company is still profitable is part of that process.
Short-term financial challenges can snowball into financial insolvency if left unaddressed. An executive who has just taken on their role may not understand where they can limit operational expenses or how to improve the company’s efficiency.
The owner or executive stepping down from their position to retire, on the other hand, is likely intimately familiar with the company’s needs and day-to-day operations. They are in an optimal position to establish a plan to reduce operating expenses and increase company profit margins.
What solutions are available?
There are many different ways to tackle business debts before retiring. In some cases, restructuring the business can be a way to address insolvency. The company can eliminate redundant positions or unprofitable locations. Reducing operating costs to make it easier for the company to remain profitable even after a challenging transition.
In some cases, business bankruptcy might be the best option available. There are several different forms of business bankruptcy that can help organizations halt collection activity, preserve key resources and renegotiate financial obligations. A successful business bankruptcy can put the company in the best possible position for an owner or executive to retire.
Reviewing recent financial records with a skilled legal team can help executives and owners determine if business bankruptcy or other major financial moves could help protect a company after their retirement. Those who implement the right plan as early as possible can help ensure the continued success of an organization even after they retire.