Small business owners juggle many day-to-day tasks such as meeting payroll, serving customers and co...

1. 4 Things Small Business Owners Must Do to Retire
Comfortably
Small business owners juggle many day-to-day tasks such as meeting payroll, serving customers and
coping with unexpected issues like replacing broken equipment. With so many immediate priorities,
it can be difficult to find time to focus on the future, especially a future that may be a decade or
more away.
A recent survey by TD Bank found that nearly half (47 percent) of small business owners do not have
a retirement plan in place. Without a 401(k) with an employer match or a pension to rely on, this is a
mistake that can be remedied with some forethought.
To properly tackle retirement, small business owners should consider the following:
1. Set a goal.
This seems obvious, but setting a goal for your business and envisioning what you plan to do at
retirement is crucial. Whether you choose to sell the business, hand it down to family or a colleague,
close the business (which often requires selling assets like equipment) or sell out a partnership, this
decision will ultimately inform how you prepare for retirement.
Our survey found that more than one-quarter of small business owners are not confident they will
have enough savings to retire comfortably. This underscores the importance of envisioning what a
happy retirement will entail. Along with your business plan, be sure to work with a financial advisor
to discuss a personal retirement savings goal and how you can meet it.
Related: Breaking Down Retirement Plan Options for Small Businesses
2. Build a retirement plan.
It's vital to begin planning and saving as soon as possible, since age contributes to how aggressive
your savings plan needs to be. Millennial small business owners have more confidence in their
retirement savings than baby boomers, according to our survey, possibly because millennial owners
started their business at a younger age on average (26 vs. 43 years old), allowing more time for
them to grow their businesses' profit margins and create comfortable retirement plans.
There are a few factors to consider when building your plan. If you want to sell your business at
retirement, be realistic about its market value. While it's impossible to predict how the economy,
real estate market and other factors will impact a business' future worth, obtaining a valuation
range can better prepare you for all outcomes. If you're relying on the funds from selling your
business at retirement and believe you can easily get $1 million only to discover your top potential
bid is $800,000, that dip in savings could highly impact your retirement plan.
Business owners wanting to "cash out" of the business at retirement still need to save cash now. It is
tempting to put all profits back into a business, especially in early growth years, but doing so

2. shortchanges you in the end. You may need to give yourself a raise to make sure you are able to max
out your contributions to an individual 401(k) or IRA. To make it easier to remember to save,
consider paying yourself on a quarterly basis as you pay your business taxes.
Related: 5 Ways to Inspire Millennial Teams to Plan for Retirement
3. Think about growing your business.
According to TD's survey, 57 percent of small businesses are sole proprietorships, meaning the
owner has essentially replaced his or her income at a corporation with self-earned income. If your
goal is to sell your business, you need to grow. Unfortunately, sole proprietorships don't sell - that
would be like buying a job instead of a business.
If you want to increase the value of your business, add employees (at least three to four) and grow
revenue. This means being less tactical and becoming more strategic in managing the business.
Don't just run the whole business top-to-bottom day in and day out. Enlist the outside help of an
accountant or banker as you hire and grow your services.
An owner of a well-run growth company can easily get 50-70 percent of the value of assets in a buy-
out or about three to four times the revenue. Investing now may make a big difference in your
retirement nest later.
4. Be smart with finances.
There are many resources available for small business owners to master their business finances,
including bank seminars and videos from the Small Business Administration. Use these resources,
which are often free, to gain insight on topics such as when to expand, when to seek credit and the
types of loans available to small businesses. In addition, keep retirement goals in mind when making
any major financial decisions like taking out a loan for the business.
As you build scale in your business, you can often increase revenue, but a banker or accountant can
help you better forecast your business' potential and help you determine which risks are smart to
take financially. They also can consult on a plan and factor in how debt level can impact your
retirement goal.
For small business owners, preparing for retirement is work. It goes beyond setting aside a
percentage of your paycheck into a company's retirement savings plan. Setting a goal, finalizing a
plan and being educated on the best options for you and your business will all aid in attaining that
dream of a post-entrepreneur life of luxury.
Related: 2 Little-Known Retirement Savings Plans Tailored for Entrepreneurs
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