Many people think of retiring early from their jobs. For most people holding normal jobs at a company there is already a retirement plan option that the company helps provide for. However, for those who have their own businesses, retirement needs to be planned carefully and much in advance. In this article we look at some of the ways in which you can retire early while running your own business.
Consider Exit Strategies
The one thing that most business employers must consider is an exit strategy. What this means is that you must be willing to sell the business if you find that it cannot be operated without you. There are two scenarios that can happen here. In both cases, you must be prepared to hand over your plans, billing statements, and other relevant documents to the new person in charge.
One is that you sell the business to a longtime employer or partner who can run the business as you did. This allows you the peace of mind in knowing the business you helped build will continue on, and gives comfort in leaving it in good hands. For owners that have strong emotional attachments to their business, this might be the best option.
The other option is that you sell the business entirely without regard to what happens to it afterwards. In that case you must look for the highest bidder and strike a deal that will net you the most cash. Sometimes competitors will buy you out and stop operations entirely, so be prepared for the worst if you sell to just anyone.
Finding a Retirement Strategy
If you are the sole owner of your business, then you can visit the bank and ask them to provide you with the details of a 401 (k) Plan for Small Business Owners. This is aimed specifically at those who are the only owners of their businesses. Finding a way to invest the profits of your sale in a hassle free manner should be a priority when you want to retire early.
Offering Incentives to Employees
The other option that is available with everyone who has started their own business is that of incentivizing work. What this means is that you provide your employees with various schemes and retirement incentives. Most of the federal IRA plans need the employer’s sanction and contribution. Looking into the ‘Savings Incentive Match Plan for Employees’ or SIMPLE IRA might be a good way to provide your employees with a sense of security in terms of job benefits. Why this is needed is because if you want to retire early and are planning to pass the company down to your successors, it might be a prudent idea to make sure that your top employees stay on even after you have left. This will ensure that you have a constant source of profits. Keeping the employees satisfied through smart incentive options is a worthwhile idea to explore.
While many people dream of retiring early, those with their own businesses must keep in mind that their future, more than most, is determined by themselves, and they should plan accordingly. When you are your own boss, the responsibility of planning your retirement is entirely on your shoulders.