Being a small business owner means wearing a lot of hats, working long, unpredictable hours, and pouring your heart and soul into your project. If you are lucky, you then start to grow, and perhaps can even look into options like franchising or expanding operations. If you aren’t, then you struggle to keep your head above water and may even be facing the scary thought of having to close down your business for good.
While it may seem strange, both types of small business owner may be in a tough position when it comes to planning their own retirement. This happens because you put so much into making your business succeed that you forget to take out of your business, too. The good news is you have this handy guide to help you get started with effective wealth management:
Hire a Certified Wealth Planner
If you want to seriously start making a plan on how to increase your wealth, plan for retirement, or even just clean up your tax returns, then you need your very own financial planner. You can find one individually, yes, but you’ll actually be better off with a full-scale certified financial planning firm, since they’d be better equipped to handle the many different aspects of wealth and retirement planning.
If you only follow through on one piece of advice in this guide, then make it this one. A bespoke financial plan with your exact assets, savings, income and more is going to help you achieve the financial independence you’ll need to safely and confidently retire.
Use Retirement Accounts to Save
Just because you don’t have an employer-backed 401(k) account (being the employer) does not mean that you don’t have access to retirement accounts. You can instead start up and start saving in:
- SEP IRA: This is a simple but very flexible retirement plan that’s particularly useful for small business owners.
- Solo 401(k): Think you couldn’t have a 401(k) as a business owner? Think again. You can get a Solo 401(k) that offers higher contribution limits as well as more investing options than the standard 401(k) or even the SEP IRA.
Create a Succession Plan
There are three options for successful small business owners.
- Sell your business
- Pass on your business
- Close your business
Unless you have no one interested in buying or inheriting your business, you won’t want to close it down just because you retire. That’s why it’s so important to first plan out a succession plan.
A succession plan outlines things like your business’s value (if you plan to sell it), or it helps set up the next generation of leadership. Either way, starting early will help improve the future prospects of your business, even if you just plan on selling it or merging with another brand.
The last thing you want is to throw away a successful business, especially when you can continue to benefit financially. If you want to keep some semblance of control, then you’ll need to pick a successor, train them, and then pass on the reigns while retaining control as a shareholder.
