How are you doing planning for your own retirement? Do you plan to keep your business alive even after you go away? Stop putting things off. Now is the time to address succession and retirement planning for your small business. Give yourself the time necessary to accumulate a significant cache to fund your golden years. You should probably started much sooner, but there is no time like the present to catch up.
We read all the time about the need to create generous compensation and benefit packages to attract top talent for our small businesses. Health care, paid holidays, paid personal days, retirement plans. The menu for benefits has grown and expanded over the years. It can be tough to compete with big companies with bigger bank accounts to draw on than yours. But, that is another topic altogether. Right now, let’s address what you are doing to plan for your own future and retirement.
Take Care of Your Succession and Retirement Planning
As you donate to employees’ 401k accounts and other employee retirement programs, are you taking care of your own future? A recent article in Fortune.com revealed that one in three entrepreneurs has not taken care of their own retirement. They have no succession plan in place. What is going to happen to your small business once you are no longer able to take care of it? Or, you might just be tiring of the daily grind of operating a small business day in and day out and want to throw in the towel. In either case, you will need to be financially prepared to take care of yourself and your family. And, you will want to be sure the business you started, loved and nurtured through the years doesn’t just dissolve into nothingness.
Many Entrepreneurs Ignore Succession and Retirement Planning
A recent article in Fortune.com revealed that one in three entrepreneurs do not currently have a retirement plan. That is a pretty shocking number, don’t you think? I sure do. Manta took a survey of nearly 2,000 of their small business customers. Results show that 34% of respondents have no retirement plan in place.
There are a number of entrepreneur-small business owner programs available here in the USA to allow setting aside significant amounts to make retirement more comfortable. The key is: if you haven’t started planning yet, get started as soon as possible. Even small amounts invested over 15, 20 or 25 years can add up as a significant nest egg.
Do Succession and Retirement Planning From the Start
Anyone who’s been reading first, our ‘Designing Strategies’ newsletter, then our more recent ‘Desiging Strategies Blog’ know we believe that planning for the end of your business should begin at the beginning of your start up. Small businesses usually start off on a pretty strict budget. Owners watch every cent that comes in and goes out. There will always be time to start putting a little bit of money back for retirement, or so we think. Time passes and there are always other things we deem more important. So, to grow a small business, we devote funds everywhere except for our own well being at retirement. The need for someone else to carry on our business when we can’t be at the helm never seems important.
We don’t think about things that might go wrong and shake up our business plans. We never know what will happen over the years of growing and expanding our businesses. Everything can go on smoothly and without incident year after year. Then, something happens. Some horrible crisis comes onto our radar. An elderly parent requires our care. A child is severely injured. We could be in a serious automobile accident. What happens to the business then?
We Don’t Always Get Advance Notice of Changes
Planning ahead for these types of potential lifestyle challenges can make them much less catastrophic. Will your business be able to go on, providing income even without your presence? If you need to sell it and recoup your investments of time and money, will it have value for buyers? These are things to think about as you lay out plans for your business. There are no guarantees of smooth sailing from beginning to end.
We’ve just encountered several horrific hurricanes that left huge amounts of devastation in their wake. I hope that none of you were significantly affected by hurricanes Harvey, Irma or Maria. Whether it was your business or your home that suffered, your business was effected in some way. Wind and flood damage could have damaged your place of business and set you back significantly it terms of both time and money. If it was your home, the same would apply. It will take time to get your household back to some level of normalcy. That means time away from your business and its ability to generate income. Were you prepared? I sincerely hope so, and wish you a speedy recovery.
If you are the one in three small business owners/entrepreneurs that have not yet begun planning for your retirement. It is time to begin – now. If you have given no thought to passing the business to a new owner, the time to do it is now. Whether you think one or more of your employees will be taking your business into the future, a plan needs to be in place. If you plan to sell it to a complete stranger, have you planned how you can increase its value?
These may be the most important plans you have made since the day you decided to go into business for yourself. If you haven’t had the time, or the money, to do succession and retirement planning, you need to get to it now. Don’t wait for any of Life’s surprises to come your way. Plan to deal with these important situations now. Position yourself so they will be less of a catastrophe if and when they occur.
For help planning your future and the future of the business you worked so long and hard to build, connect with us today. Let us help put you on track for success after you leave your business.
