4 Business Planning Tips For Your Coming Retirement

Small business owners often have to juggle many day-to-day tasks such as meetings, organisation, staff management, planning, payrolls, serving customers as well as coping with unexpected issues like replacing broken equipment and logistics.  With so many immediate priorities, it can be extremely difficult to find time to focus on the future, especially a future that may be a decade or more away but none the less it has to be done.

A recent survey found that nearly half (47 percent) of small business owners do not have any retirement plans in place so are obviously facing an uncertain future. Without a 401(k) with an employer match or a pension to rely on, this is a big mistake that can be remedied with some forethought if only the time was there to think about such things.  Some of the aspects to consider are to properly tackle retirement, small business owners should think about the following:

Set a realistic goal.

This seems obvious, but setting yourself a goal for your business and envisioning what you plan to do at retirement is crucial this is indeed the truth and yet at the same time it’s also a conspiracy.  You as a director, manager, CEO or project manager must indeed conspire with your counterparts to ensure the best possible outcome for you and the rest of the company providing the quickest route to a successful outcome in the shortest possible time frame.  

Ie Conspire-I-See <conspiracy> and think of “phonics” or [Phoenician language] where the term was born.  There is not a single business that has ever made a success out of not planning and conspiring (in harmony) with the other people in your business as a team. Bickering and infighting will get you nothing but failure in the end.

Whether you choose to sell the business, hand a legacy down to your family, colleague, launch onto the stock market or indeed cash in and close the business at the end of the day to liquidise capital (which often requires selling assets like equipment) or sell out a partnership completely, this decision will ultimately inform how you can prepare for your future needs when the time comes to the question of retirement.

Our survey found that more than one-quarter of small business owners are not confident they will have enough savings to retire comfortably. This underscores the importance of envisioning what a happy retirement will entail. Along with your business plan, be sure to work with a financial advisor to discuss a personal retirement savings goal and how you can meet it.

Build a retirement plan.

“It’s vital to begin planning and saving as soon as possible, since age contributes to how aggressive your savings plan needs to be in the long term.”  - Retirement Income Net - Experts in Retirement Business Finance

“Small business owners have more confidence in their retirement savings than baby boomers as a rule and according to our surveys, possibly because (millennial owners started their business at a younger age on average 26 vs. 43 years old), this allows for more time for them to grow their businesses' profit margins and create comfortable retirement plans in times to come.” - Retirement Income Net

There are a many factors to consider when building your plan. If you want to sell your business at retirement, be realistic about its market value in the current climate. While it’s impossible to predict how the economy, real estate market and other factors will impact a business' future worth, obtaining a valuation range can better prepare you for most of the possible outcomes if you are careful.  If you’re relying on the funds from selling your business at retirement and believe you can easily get $1 million only to discover your top potential bid is $800,000, that small dip in savings could highly impact your retirement plans when all is said and done.

Business owners wanting to "cash out" of the business at retirement still need to save cash now. It is tempting to put all profits back into a business, especially in early growth years, but doing so shortchanges you in the end. You may need to give yourself a raise to make sure you are able to max out your contributions to an individual 401(k) or IRA. To make it easier to remember to save, consider paying yourself on a quarterly basis as you pay your business taxes

Think about growing your business.

According to most surveys, approx 57 percent of small businesses are sole proprietorships, meaning the owner has essentially replaced his or her income at a corporation with self-earned income. If your goal is to sell your business, you need to grow it first, maximising your potential. Unfortunately, sole proprietorships don't sell that well – that would be like buying a job instead of a business.  Stock market floatation is nearly always the best way to go if you have the right team and professionals to help you prior to any sales and this is also not a simple option but can provide some of the highest gains very quickly.

If you want to increase the value of your business, add top employees (at least three to four at the high end) and grow revenue overnight. This means being less tactical and becoming more “strategic” in managing the business and bringing in the best people who you can find to advise and steer the launch to the finish.  Don't just try to run the whole business top-to-bottom day in and day out on your own as often other more qualified people can do this more efficiently and faster than you.  Never think you are the best big cheese on the block but search out others that may be better qualified for the post.  Enlist the outside help of an range of people from project managers to  accountants, bankers etc,. as you hire and grow your company's attributes to the customer.

An owner of a well-run growth company can easily get 50-70 percent of the value of assets in a buy-out or about three to four times the revenue. Investing now may make a big difference in your retirement nest later.

Be smart with finances.

There are many resources available for small business owners to master their business finances and it is important to study this aspect as a crucial part of making a success, from bank seminars and videos to the Small Business Administration.  These are all at your disposal on a local level if one takes the time to investigate these opportunities.  Use these resources, which are often free, to gain professional insights on topics such as when to expand, when to seek credit and the types of loans available to small businesses like yours no matter what you are aiming for in the longer term. In addition, keep retirement goals at the forefront of your mind before making “any” major financial decisions like taking out a loan for the business or taking out another mortgage on a sinking ship.

For small business owners, preparing for retirement is work in itself.  It goes beyond setting aside a percentage of your paycheck into a company's retirement savings plan but is intrinsically part of the master plan at the end of the day.  Setting out your goal, finalizing the plan and being “educated” on the best options available to you and your business will all aid in attaining that dream of a post-entrepreneur life of luxury we are aspire to at the end of the day.