Firm Management

How An Entrepreneur Can Shift Their Business Plan As Their Near Retirement

(Credit: Unsplash) How An Entrepreneur Can Shift Their Business Plan As Their Near Retirement
January 7
2:20 PM 2020

The running of a successful business long-term is one of the most rewarding experiences for an entrepreneur. Even the most driven entrepreneurs look forward to the day where they have the ability or desire to retire. Keeping all the money in the business simply is not possible for many that want to retire. Selling a business can be very profitable but this is a one-time payment instead of supplemental income for years to come. Even selling a portion of the business can be wise so there is a lump payment combined with a monthly or quarterly check. A proactive approach is important instead of scrambling once you decide you do not want to work another day/week. The following are tips to shift business as an entrepreneur nearing retirement. 

Putting Someone Else In Charge

A family business can be easy to pass down but this is not the case for all founders of businesses. Putting another person in charge could lead to the demise of a company which can be financially risky if the company is not sold. The culture of the business should be kept the same as this is the recipe that has been working for decades. A slow transition period where tasks are handed off is recommended as it can be overwhelming to be given all founder-related responsibilities at once. A slow retirement is also one that can be easier to adjust for an entrepreneur that has been working at least an hour daily for decades. Taking off another work day every 6 months can be a great way to transition over the course of a few years. You might find that working 2 times a week is enjoyable rather than a chore that many jobs become after extended periods. 

Invest Current Funds In Various Dividend Stocks

According to Retirementinvestments.com it is important to shift investments to more conservative options when nearing retirement. This is due to only having a certain amount of money left to earn so any huge loss could delay retirement for years.  For example, futures trading is not recommended for those unfamiliar with the stock market so funds being handled by a financial advisor could be paramount. Take the time to look at and do an evaluation of how much money you will need to live comfortably for the duration of your life. Take social security as well as your minimum deduction from your IRA into account. 

Create An Exit Strategy/Date

A retirement date can make it far easier to start taking care of the important details before the sale or passing down of the business. This will also allow you to start phasing yourself out of the business that you have worked so hard to build. Remember that you have the responsibility to take care of your current employees or at least let them know what the future holds. Also, take the time to enjoy your last days working as at times it is the little things about a job that we enjoy!

Profit From Future Years Instead Of Completely Selling

Selling more than half of the company will take the power of decision making out of your hands. This can be great for a business owner that trusts their company is being put in good hands. Profit from future years can provide a great stream of income but if the company goes out of business you lost out on the profit from your hard work. Understand that it is more of a risk to sell a portion of the business rather than sell the business completely. The last thing you want to do is have to go back to work due to current management needing help as their leadership is failing. 

Retiring comfortably is all that many people want especially if they started their own successful business. Take the time to evaluate the choices that you have to make far before your final retirement date!

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