Small Businesses and Retirement

May 31, 2012 § Leave a comment

So, you work for yourself. Yeah, me, too. We balance a lot of hats, many responsibilities. And we are good at some of what we do, though not all.

 One thing we tend to do is invest in our business because we understand it, AND we may also think we can sell it for our retirement. Let’s talk.

  No real plan– According to a recent survey by The American College most small business owners don’t have a formal plan to achieve their financial objectives. Many have not sought the help of a professional to figure out what they might need in their retirement future compared to what they have. Some business owners have used pencil and paper to make simple calculations about their futures. If you are really counting on these calculations, may I suggest that you think in more detail about the future? You need a real plan.

 No one to rely upon– As a business owner I like to do things myself. I heard someone on a business show once say, “I’ve worked for myself so long, I am almost unemployable.’ We’re a quirky and opinionated group. But we are smart and we recognize that though we may be experts in our field, we don’t know everything. That means, other folks might be experts in THEIR respective fields and may be able to help us with their expertise.

 When it comes to an exit strategy for your eventual retirement, talking to an expert could help you. Typically like you help your customers, consulting an expert may help you consider things you hadn’t ever considered. You do so much yourself but in this field you may need help. Retirement is too important to not talk over with someone you trust. The earlier you discuss things the more time you’ll have to plan and to adjust what you’re doing for a smooth transition later.

 Selling the business for retirement– Many business owners plan on selling their businesses for their retirement nest-egg. But we don’t always realize the value of our business and we sometimes think we can get more for it than may be realistic.

 Many details add up to create your business’ valuation. Here are some basics to consider. Are you the main person, the ‘key employee’ who when you’re gone there are no sales or no expertise? If the business has to be sold suddenly, you will potentially get less than if you have two to four years to sell.  The health of your local economy at the time of sale will impact the sale price. What valuation model do other, similar businesses use to value their business? How much would it cost to start this business from scratch?

 These details and others all add into the value of your business. You don’t want to have worked so well for this long to have things go array.  ‘Be careful for your retirement and of having all our eggs in one basket.’ Get some advice so you can have the beautiful future of your dreams.

 

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