Senior man giving woman piggyback rideWhile owning your own business may be part of your American dream, this type of success doesn’t come without some risk. It’s a common goal to sell the business at retirement time, and to live on the expected profits. But many small businesses fail each year, even those that have been around for decades. Rather than counting on selling your business for a large profit to fund retirement, formulate a retirement plan that isn’t dependent upon your business’s value years from now.

Instead of assuming that your business – whether you plan to sell it or hire someone to run it for you – will provide the income you need in retirement, remember to diversify your assets. Diversifying will protect you from putting all of your eggs in one basket (your business) and risking losing everything at the whims of poor economic conditions or consumer trends.

Many different factors can affect the worth of your business. If the country experiences another recession in the future, your profits could drop. Rising energy prices, changes in technology, and changes in consumer preferences can also affect your bottom line. Since potential buyers look at profit margins before deciding whether to purchase a particular business, poor economic conditions could affect your ability to sell the business. These factors are, unfortunately, mostly out of your control.

Remember that your company is an investment like any other. Most people don’t invest all of their resources in a single stock, and likewise you shouldn’t invest everything you have in your business. Rather than investing all of your profits back into the business each year, consult with a qualified insurance professional or financial advisor about your vision for retirement. Make sure that you plan for retirement just as a non-business owner would, formulating a savings plan based off of your personal earnings rather than counting on the sale of your business.

http://www.businessinsider.com/small-business-owners-are-optimistic-2013-6

http://www.foxnews.com/politics/2012/07/26/economy-lost-more-than-200000-small-businesses-in-recession-census-shows/

This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional.  The statements and opinions expressed are those of the author and are subject to change at any time.  All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only.  It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 

13430 – 2014/5/29