When you first started your business, I’m sure the last thing on your mind was retiring. But retirement should be a very important part of your plan. As the years go by, it becomes obvious that you cannot go on forever and at some point in your professional career retirement sounds like a good idea.
In a perfect world, an entrepreneur or business owner should operates their business with retirement as part of the long term plan, with the ultimate goal of cashing out and using your business as your retirement fund!
But even if retirement has crept up on you and you’d like to use your business as a retirement fund, you still have time to develop the income you need to enjoy your golden years.
If you want to turn your business into a retirement fund, then you need to focus on:
- The short-term value of the business
- The long-term value of the business
- Finding a reliable buyer
- Having a retirement plan in place that will be partially funded by selling your business
With these elements in place, you will be able to develop a robust retirement plan that will be enhanced significantly by the sale of your business.
The Short-Term Value Of Your Business
When you are trying to sell a business, curb appeal means a great deal. In the business world, curb appeal is:
- A dedicated customer base
- Strong vendor relationships
- A mastery of your industry
- A strong marketing plan
When a buyer first looks at your business, they will want to be able to step in and make a profit. With a good short-term outlook for your business, you can attract multiple buyers and choose the best deal for your and your retirement fund.
The Long-Term Value Of Your Business
Many business owners will argue that the long-term success of a business after they sell it is the responsibility of the person who buys the business. This is true to an extent, but it is still easier to sell a business when you can show that it has long-term potential for growth.
When you started your business, you put together growth plans that helped you to increase revenue and meet your corporate goals. As you get close to selling your business, you should still be formulating growth plans that can be shared with the new owner. While the new owner may look at your business and see their own ideas of potential, you can sweeten the deal by including growth plans that come from your extensive knowledge of the business, the industry, and the customer base.
Finding A Reliable Buyer
Finding a reliable buyer means you go through a bid process that relies on more than just a high bid price. It could very well be that the person who is offering you the highest price for your business cannot get the financing, and may never be able to pull together the funds to buy your business. In the meantime, you agree to sign over the business based on a promise to pay, and you wind up having to take on a full-time job to fund your retirement.
If the person offering the second highest bid price for your business has the financing in place and is a solid prospect, then that is the person you go with. If you do not make the right decision when it comes to the buyer of your business, then your retirement could be ruined and your plans will be gone. Do your due diligence on any potential buyer and even outsource the services of your solicitor to make sure the buyer is in a position to go through the sale.
A Retirement Plan
While selling your business might be the main source of funding for your retirement plans, it should not be the only source. Throughout your working career (apart from government funded plans like superannuation), you should be saving money in a retirement fund and preparing yourself for the day when you walk away from it all. It is nice to sell your business for a high price and walk off into the sunset with money in your pocket, but it would be nicer if there was a growing fund in the bank that would add to that money in your pocket, and allow you to live your dream retirement.
Proactive entrepreneurs think of everything when they start a business, and that includes planning for retirement. The key to using your business as a retirement fund is to secure the best possible selling agreement you can, and then you can walk away free and clear. Start planning now and you will be able to sell your business for a profit and enjoy your retirement years.
Tell us, what business have you/do you own? Have you been looking to sell up to fund your retirement? What is your plan?