Small business owners are often in an unusual position because they won’t receive a pension from their employer once they retire. The self-employed have to think more carefully than most about planning for their retirement. This weeks tips column contains our Top 5 Tips for planning your retirement from a small business:
1. Your retirement might still be 30+ years away, but if you own a small business then you alone will be responsible for what happens at that time in terms of your financial security. If you push it to the back of your mind for five or ten years while you concentrate on the business, no-one will have sorted it out for you in the interim on your behalf. It is difficult for small business owners because they often have a lot more to deal with on a daily basis but getting this sorted out should clearly be on your “To Do” list.
2. Saving for retirement is a marathon not a sprint, so it makes sense to put away a little every year if possible. Some business owners look upon eventually selling the company as their retirement fund, but what if the business is devalued between now and then? The products or services you provide could be completely obselete and your business worthless when it is time for you to retire.
3. Make sure you get some professional advice. Investment advisors should be able to give you some great pointers about where to stick your money to get a healthy return and this could well be essential if you want to make any money at all on your savings with interest rates currently in the toilet. Property is always a good investment so you should try and make sure the business owns some as part of its portfolio – this might drastically increase the final sale price.
4. Things change on a regular basis so it is a good idea to go back and check your retirement arrangements every couple of years. Investments can change completely following an economic crisis and locations can increase in value fairly quickly so you might want to change your plans.
5. Our final tip is a reminder to enjoy your retirement and that retiring doesn’t necessarily have to be the end of your entrepreneurial journey. There is nothing to stop you running a micro business in your spare time or serving as a mentor for fledgling businesses that would benefit from your knowledge.