As a small business owner, it’s not as if you’re going to retire with a gold watch and a pension.

Your retirement may depend on whether you can sell the business, find and train a successor, or involve your kids in your enterprise. None of this is easy, and if you don’t have a succession plan, you’re not alone. In a survey last year by the online legal service provider Rocket Lawyer, nearly three quarters of small business owners didn’t have a succession plan in place.

By avoiding succession planning, you’re risking your own and your family’s well being. A friend of mine learned this the hard way a few years ago, when her father, a respected physician, died suddenly of a heart attack at age 68. He left no will, no life insurance and no agreement with his medical partner. It was a mess, and in the end, the partner got the entire value of the medical practice and my friend and her siblings got a lot of heartache.

Without succession planning, you risk some of the most important things you hoped to achieve with your business, including a secure retirement for yourself, an inheritance for your children, and a community institution that will endure after you step down. You can’t expect your business to thrive on its own if you don’t plan for the day that you won’t be around anymore.

Choosing a Successor

Many experts recommend that you start thinking about succession at least 10 years before you plan to retire. It takes time to identify the right person and groom them for the job – and the first person you choose might not work out.

Many business owners dream of handing the business over to their kids, but it’s important to look at the situation objectively. Do they have any interest in the business? Do they have “what it takes” to run it? If you have more than one child, how well can they work together? It may help you to know that there are ways to set up a succession plan that turns the business over to one child but is still fair to your other children.

If your children won’t be your successors, you may find someone inside the company, either a current employee or someone you recruit with successor potential in mind. It can take trial and error to find the right person. You can arrange for the employee to buy the business, or to manage the company while you or your heirs retain ownership.

As you groom your successor, let your employees know about the change. Also begin talking to clients, customers, lenders, vendors, and others with whom you have business relationships. The transition will go more smoothly if you are open about it and ease your successor into the new role.

Selling your Business

If you had to sell your business tomorrow, could you do it? Retirement isn’t always by choice, and it’s never a bad idea to keep your business in a position where you could sell it if you had to.

What does this mean? It starts with getting your finances in order and determining the value of your business. Obviously, your business will be most attractive to buyers if it has healthy cash flow and reserves, a good roster of customers or clients, and not too much debt. Organizing customer lists and writing down the way you run the business and the roles different people play can help someone new step in. It also helps to develop a brand for the business that doesn’t depend on you personally being involved.

Dealing with Partners

If you have business partners, it’s logical to have your partners take over after you retire, but do you have a written agreement for them to buy you out? Many business owners take out life insurance policies that name the business as a beneficiary, enabling the remaining partners to buy out the interest of a deceased partner’s heirs.

Closing Down

Sometimes, after evaluating all the options, you conclude it’s best to just close the business and liquidate its assets when you retire. This might happen if your business profits have been declining, you can’t find a buyer, or your business depends heavily on you personally being there. If you intend to shut down, work with a lawyer and an accountant to plan for tax consequences, wind up the business properly, and avoid legal problems.

Retiring from a small business takes a lot of thought and advance planning. But the reward of a secure retirement and a future for your family can be more than worth the effort.