Business owners rank maximizing the value of their business as the most important part of their retirement planning, according to SunTrust Business Owner Research. Consider the following four steps to help maximize the value of your business and the overall transition to retirement.
Step 1: Grow the value, so your business can be sold or transferred easily at a good price
Having a plan for building and monetizing your business asset well before you plan to leave your business should be a key part of your retirement strategy. You can build the value of your business by growing profits, strengthening cash flow and improving management processes. Ask your banker for a referral to a treasury management expert who can use leading edge tools, technology and expertise to improve your working capital utilization.
Step 2: Shelter more of your business profits and value from taxes
You can save and shelter more of the profits your business generates with retirement plans such as a 401(k) or by creating a trust that transfers your business asset with lower taxes. It has never been easier or more affordable to setup a retirement plan for your company. Ask your banker about simple and affordable online 401(k) products for businesses. It allows you to set-up a plan in under an hour and helps automate much of the paperwork associated with running a retirement plan.
Step 3: Sustain your business, so you can work longer
If you are like most business owners and plan to live off the income of your business as long as possible, consider finding ways to leverage yourself by bringing in a partner or developing management talent. According to SunTrust Business Owner Research, leveraging employees and other people is the top way for owners to create more free time. Management leverage will allow you to work longer in your business without burning out. It may also allow you to spend more time doing the things you love or managing business-provided benefits like healthcare.
Step 4: Seek out guidance to grow and realize the value of your single biggest asset — your business
Retirement planning is very different for business owners for many reasons. You should consider working on a retirement strategy with an advisor who can help you grow your most valuable asset: your business. A good business banker with a sound financial institution that is committed to your business can draw upon the wider range of resources you need to better prepare yourself for retirement, such as:
- Systems for managing cash flow and finance
- Estate, succession and contingency planning
- Retirement plans
- Financial resources