Retirement Planning for Small Business Owners

You might be young and think that retirement is way out in the future. Reality is that the future could come sooner than you think. A lot of retirements are involuntary. Retirement does not always happen at the time you are ready. Yes, I know growing your business takes priority right now, but every step you can take to deal with the unexpected and even the expected will only help.

As a business owner, you might think that your business will fund most of your retirement and it certainly could, but it is very risky to rely on just one source of funds. We will take a look at those alternatives a little later, but since your business is your main priority, let us begin with that.


Your Business
If your business is to have any value as a retirement vehicle, it needs to be salable. If nobody wants to buy it, you cannot unlock the value you have accumulated in it. Selling the assets, liquidation, is the option the least likely to yield the kind of cash you had expected. There are a number of things you can do to make it easier to attract a buyer on short notice if you have to.

• Always be prepared to sell
• Always have clean books
• Create systems and processes so it can run without you
• Find out who your most profitable customers are
• Diversify. Do not rely on just a few large clients
• Have long term contracts with clients and vendors
• Focus on most profitable product or service
• Brand. Be the go-to place for whatever you are selling

To put it more briefly, be a business owner, not self-employed.

The Alternatives

About the time your new business is profitable and you can pay yourself enough to make a modest living, it is time to begin accumulating assets outside your business. There are many ways to do this. Some of them are quite creative, but often amount to starting another business. Do not do that until you have enough funds for the kind of retirement you want. Then you can do whatever you want with your spare change and your spare time. The idea is to soften the blow as much as possible in the event something catastrophic happens.

• Accumulate enough cash to cover your living expenses while you sell your business
• Accumulate funds in medium and long term work-free tax advantaged retirement plans
• Fund other goals such as college plans for your kids, home and/or car
• Get an estate plan

Whatever you do, do not listen to investment gurus. Get educated, yes, but do not let yourself get distracted from your main job, to build a valuable business. Plain and simple is the best strategy. Stay focused. Retire early. Then you can go wild.

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How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won't Get from Your Financial Advisor By Ernie J. Zelinski

Almost all the retirement advice you find is focused on the financial aspect of retirement planning, but that is actually the least important for business owners. Business owners are driven by purpose far more than other people and when that purpose suddenly goes away in retirement, many slip into depression and all kinds of other problems. How to Retire Happy Wild and Free helps you identify that new purpose for you. Retirement is supposed to be the best years of your life.