5 Steps to Retiring Rich From Your Small Business
In order to retire rich, or at least with the lifestyle you desire, you will need to plan for your retirement as soon as possible.
Retiring with a nice "nest egg" does not happen by accident.
It is a result of careful planning and calculations.
To plan for a successful retirement, there are 5 critical steps to rest assured that your retirement is exactly what you planned for and that you are on track to achieve it.
Step 1: Determine the value of your business.
An employee may check the value of their retirement multiple times per month, but sadly many only check the value of their retirement shortly before they decide to retire.
By waiting to the last-minute to discover the value of your business, the largest majority of your retirement, on average 65% of your retirement, you are playing a game of Russian Roulette with your future.
The best way to manage the value of your retirement, aka your business, is to have the business valued every three to five years.
This provides a business score-card by which you can plan and estimate the largest chunk of your retirement.
An experienced business broker can assist you in determining the fair market value of your business.
Step 2: Establish possible deal structures when selling.
It is nice to dream that the new buyer will come with a wheel barrel of money, but this often does not occur.
What does usually occur is the buyer has some cash and the rest of the purchase price is offered in terms.
This could be an earn out, seller financing, bonus or even balloon payment.
By analyzing the possible deal structures, you will have a better idea of your post business ownership income and this will allow you to better plan for your future.
An experience business broker along with an account familiar with business sales can help you decide possible deal structures.
Step 3: Calculate the tax ramifications of the business sale.
As with any major sale, there will be taxes that need to be paid.
The structure of your sale will determine the tax ramifications of the sale.
An experienced account can predict your taxes with the proper allocation of your sale to the various components of the sale.
Step 4: Evaluate your income after your retirement.
Once you have sold your business, you may have various other incomes, such as social security, IRAs as well as business related income.
By evaluating all your income sources, your yearly income is calculated and you will be able to decide if that income is enough for the lifestyle you desire for your retirement.
An experienced financial planner can help you calculate this result.
Step 5: Assess the results and update on a regular basis.
Once all the numbers have been "crunched," its now time to determine can you retire rich.
If you are not excited about the numbers you see, you have time, and hopefully plenty of time, to work on the business to achieve the results you want.
By updating your numbers on a regular bases, you will know that you are well on your way to retiring rich.
Retiring with a nice "nest egg" does not happen by accident.
It is a result of careful planning and calculations.
To plan for a successful retirement, there are 5 critical steps to rest assured that your retirement is exactly what you planned for and that you are on track to achieve it.
Step 1: Determine the value of your business.
An employee may check the value of their retirement multiple times per month, but sadly many only check the value of their retirement shortly before they decide to retire.
By waiting to the last-minute to discover the value of your business, the largest majority of your retirement, on average 65% of your retirement, you are playing a game of Russian Roulette with your future.
The best way to manage the value of your retirement, aka your business, is to have the business valued every three to five years.
This provides a business score-card by which you can plan and estimate the largest chunk of your retirement.
An experienced business broker can assist you in determining the fair market value of your business.
Step 2: Establish possible deal structures when selling.
It is nice to dream that the new buyer will come with a wheel barrel of money, but this often does not occur.
What does usually occur is the buyer has some cash and the rest of the purchase price is offered in terms.
This could be an earn out, seller financing, bonus or even balloon payment.
By analyzing the possible deal structures, you will have a better idea of your post business ownership income and this will allow you to better plan for your future.
An experience business broker along with an account familiar with business sales can help you decide possible deal structures.
Step 3: Calculate the tax ramifications of the business sale.
As with any major sale, there will be taxes that need to be paid.
The structure of your sale will determine the tax ramifications of the sale.
An experienced account can predict your taxes with the proper allocation of your sale to the various components of the sale.
Step 4: Evaluate your income after your retirement.
Once you have sold your business, you may have various other incomes, such as social security, IRAs as well as business related income.
By evaluating all your income sources, your yearly income is calculated and you will be able to decide if that income is enough for the lifestyle you desire for your retirement.
An experienced financial planner can help you calculate this result.
Step 5: Assess the results and update on a regular basis.
Once all the numbers have been "crunched," its now time to determine can you retire rich.
If you are not excited about the numbers you see, you have time, and hopefully plenty of time, to work on the business to achieve the results you want.
By updating your numbers on a regular bases, you will know that you are well on your way to retiring rich.
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