Do you own a business, the lifeblood of employment in our economy? Wonderful! Is the expected future value of your business a primary part of your personal retirement plan, or are you postponing other retirement savings or even planning for retirement until you can find enough time?
The life of a business owner is certainly a long and busy road. Every day, you must accomplish necessary, time-consuming tasks to build and strengthen your business, including developing customer relationships, handling employee issues and managing cash flow. Your business is likely a focal point of your life.
Unfortunately, most business owners often neglect their personal financial goals. It’s more common for owners to put off planning for their financial future until later in life when “things settle down,” or when they discover that it’s time to start planning for an exit from the business.
Let’s focus on two phases in the life of a business owner: the pre-retirement years, in which they’re primarily focused on managing the business; and the years preceding their exit from the business. Both phases are critical, but for different reasons, and they come with different priorities, too.
There are some common roadblocks to prudent planning in the first half of the life of a business.
The business owner must play numerous roles in the company to keep everything afloat. He or she often has well-defined goals and big dreams for the business, but is inundated with an endless list of tasks and limited time to accomplish them all. Lack of time often causes business owners to fall prey to one of two outcomes:
- They fail to create a defined plan for their family’s financial future. It can be risky for business owners to make decisions on their own without sufficient information or solid analysis. But without adequate time or experience, owners may make an expedient decision, which can lead to regret down the road.
- Sometimes, owners don’t take action at all – while they’re focused on strategizing for the future growth of their business, they wind up missing out on opportunities to grow or protect their family’s financial situation.
What is the solution? Prioritizing some key issues at various stages of the business lifespan could be beneficial.
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