As a small business owner, you undoubtedly juggle a hundred different jobs, roles, and responsibilities at any given moment. With so many immediate priorities such as customer service, payroll, supply demands, etc., it can be difficult to find time to focus on the future. Particularly if your ‘not so distant’ future includes preparing for retirement. For many small business owners, organising your retirement plan has certainly taken a backseat; and keeping all of your eggs in one basket (being the equity in your business) may not be the most strategic plan for your retirement or your business’ longevity.
To prepare yourself for a flexible and fruitful retirement, small business owners should consider the following:
1. Set A Goal
It may seem obvious, but setting a clear and achievable goal for your business come retirement is crucial. Recent surveys released throughout the United States and Australia indicate many small business owners do not have enough funds to retire comfortably. Therefore, selling your business may become necessary for some, or a strategic move for others. Whether you choose to sell the business or sell out a partnership, this decision will ultimately dictate how you prepare for retirement. This is where the help of your professional advisory team (including financial planners, lawyers, and your dedicated business broker) are here to support you in your decision to sell.
2. Build A Retirement Plan
If you want to sell your business at the time you intend to retirement, be realistic about its market value. 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 and your business. If you’re relying on the funds from selling your business at retirement, it is wise to speak to your professional advisory team about developing a plan that is right for you.
3. Think About Growing Your Business
In Australia, many small business owners essentially placed their entire income into the business to boost its capital. If your goal is to sell your business as you approach retirement, you need to grow your business. If you want to increase the value of your business, hire employees and grow revenue. This means being less tactical and becoming more strategic in managing the business.
4. Be Smart With Finances
There are many resources available for small business owners to master their business in preparation for retirement. These resources are designed to provide insight to small business owners who may only be thinking about retirement and selling their business for the first time now.
As you build scale in your business, you can often increase revenue, but a banker or accountant can help you better forecast your business' potential and help you determine which risks are smart to take financially to ensure a great return on investment at sale time.
Thinking of selling your business to kick-start your retirement fund? Want to know more about how to sell? Contact our friendly team at Verified Businesses for your own information pack or to book a consultation today. Our highly experienced team of business brokers are the Number 1 team on the Sunshine Coast in business sales. At Verified Businesses, success in business is Verified.