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Will Your Small Business Moves Lead to Early Retirement?

John McMalcolm

April 01, 2015

As a small business owner, you do not have an employer to plan your retirement for you, and you will not be getting a pension.

As such, you will most likely have to come up with your own retirement plan.

Here are some useful tips for planning your retirement and running a successful small business that can lead to early retirement….

Planning for Retirement

Devise an Exit Strategy

Your small business may be your largest asset, and you will have to liquidate it if you want to use it to fund your retirement.

Before you start looking for someone to buy your business, you have to make sure that it can operate without you and get it appraised so that you can set a fair selling price.

Once it is ready for sale, you can find a suitable buyer by approaching someone you know who may be interested in buying it, such as a partner, business associate, employee, competitor or relative, or placing an ad in an entrepreneurial website, newspaper or magazine.

Adverse market conditions can make it difficult for you to get top dollar for your business.

As such, it is essential that you keep your retirement plan flexible, so that you can sell your business at the most opportune time.

Find out How Much You Need to Retire Early

Using a retirement calculator is one of the best ways to get an accurate estimation of the amount of money you need to retire early and comfortably.

According to an article entitled "How Much Do I Need to Retire Early?" a retirement calculator shows you how close you are to your retirement savings goal, how long your savings will last and how you can make improvements to achieve a better outcome.

It takes many factors into consideration, including your monthly income and savings, Social Security benefits, IRA and 401(k) plans, mortgage balance and payments, insurance and others.

Select a Retirement Plan

There are a number of retirement plans available to help small business owners save money for retirement.

If you run your business yourself and do not have any employees, the Simplified Employee Pension (SEP) IRA plan is a good option for you. It is easy to set up and maintain, and it incurs minimal administrative costs. Every contribution you make to your SEP IRA is tax-deductible.

Another retirement plan that is easy and affordable to set up is the Savings Incentive Match Plan for Employees (SIMPLE) IRA.

However, contributions to this type of account will count against your 401(k) contribution limit, and penalties may apply if you need to withdraw early.

Starting a Solo 401(k) account is another way to boost your retirement savings. It comes with generous contribution limits, and it does not require you to contribute a fixed amount every year.

How to Run Your Business Successfully to Achieve Early Retirement

Here are a number of general business tips that can help you reach your retirement goals sooner:

•  Keep a close eye on your finances.

•  Hire employees who have adequate skills, a good work ethic and pleasant personalities.

•  Manage your accounting and taxes properly.

•  Choose products or services that are in high demand and have high profit margins.

•  Promote your business using a variety of marketing mediums.

•  Look for opportunities to expand your business.

Many people want to retire early, but only some of them succeed in doing so.

The tips above can help you increase your chances of retiring early, comfortably and happily.

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