There are No Mulligans in the Retirement Game: Small Biz Owners, Be Prepared.

You may delay but time will not

I love the spirit I find in small business owners like you when I get to travel around the country. You’re optimistic, confident and willing to take risks.

We need more people like you!

You know that if one business idea doesn’t work out, it won’t be long before you get another great idea and you can give that one a try. In the world of startups, if you fail once there’s always another opportunity for success.

However, that’s not true with your retirement. When the calendar or your health says it’s time to retire, there aren’t any “do-overs.”

Small business owners unprepared

A TD Bank survey found that 47 percent of small business owners didn’t have a retirement plan in place. For owners who started their businesses from scratch, 27 percent said they just plan to shut the doors when they retire. Interestingly, for small business owners who purchased their businesses, only 8 percent will merely walk away when retirement time comes.

If there is any good news in these figures it may be that the Baby Boomers typically started their businesses at an older age – 47 years on average – while Millennials started their businesses when they were 26 years old. In other words, there is still time for Millennials to get their retirement plans in order.

For the small business owner, preparing for retirement is more complicated than for someone whose income has always come from a salaried position. For the salaried worker, the only real question is how to invest one’s savings. There are many options and strategies to consider, but the central question is simple and direct.

Don’t waste your work

However, for a small business owner, the question of transferring the business is also part of the retirement strategy. Shutting the doors, as so many are planning to do, yields nothing on all the sweat equity small business owners invest in their businesses.

Frankly, if you don’t have a succession plan, it would probably be better to work for an employer with a 401(k) where the company matches contributions up to the legal limit. At least then you’re getting some return for just “showing up.”

Books are written on retirement strategies, and I recommend you get a few and read them; I can’t say everything that needs to be said here. But let me leave you with three solid pieces of advice:

  • Find a financial planner who you like and trust. Start working regularly with this person.
  • If you can see the retirement light at the end of the tunnel, don’t plow your savings into another business venture. It’s far too risky.
  • Grow your business. A business that shows solid growth and growth potential will find a lot of willing buyers when it’s time for you to cash out.

Benjamin Franklin is famous for the wisdom he captured in short maxims. This one fits retirement perfectly:

“If you fail to plan, you are planning to fail!”

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