Articles & E-Books


Is your business your nest egg? 4 ways to make sure it’s secure

Apr 28, 2022

By John Shevlin

Entrepreneurs put their heart and soul – and personal finances – into their companies. So it’s not uncommon for them to expect a big payout at the end. In fact, many business owners count on their businesses to become the golden goose that funds retirement.

“Counting on it” and “planning for it” are not the same thing. To ensure business proceeds are able to support the retirement timeline and lifestyle you want, business owners need to plan ahead. Transition plans and retirement plans need to be organized, communicated and coordinated.  

These four steps take chance out of the equation and help owners secure a successful business transition and retirement:

1. Create a vision for your business and for your retirement

Business owners establish long-range goals as part of strategic planning. How big will the company become? How many locations will it operate, or customers will it serve? When creating those plans, consider what success requires; what the time commitments and day-to-day responsibilities will be like at various points in time.

Create a similar retirement vision. Imagine how you want to spend your days in retirement, and how soon you want to start easing out of work.

2. Find the intersection of business and personal

The visioning exercises help you understand where the business is going, when you’ll be ready to step out of a leadership role, and how to prepare.

If the business will continue to maintain a growth trajectory after you leave, then you need to set the foundation now. If the business needs to reach a certain threshold to fund retirement, then business plans need to jump into alignment.

Strategic business planning, transition planning and personal retirement planning all need to be in sync for owners to realize their professional and personal goals.

3. Communicate your plans

Once you’ve harmonized your business and retirement plans, share them. Obtaining multiple viewpoints can validate your assumptions and produce better results.

For example, working with a personal financial planner or wealth manager can help you understand the financing you need for retirement and the tax implications of different sources of income. Professional advisors can also help you organize the business to maximize the value of your eventual transition.

At work, managers and executive team members can keep you accountable to the strategic plan. They can also help you measure and monitor progress.

Communicate your objectives – personally and professionally – to the people who need to know, and who can help you reach your goals.

4. Build transferable value

If you’re running a business today to fund a future retirement, you need to build transferable wealth. Value can’t live and die with the company’s owner; it has to be transferrable to a successor or buyer.

Identify skills and talents the company will need to meet its longer-term strategic objectives, and to fill your shoes someday. Training and developing key employees early ensures the business transitions smoothly – and for the highest price. It also demonstrates business continuity and mitigates risk.

Other considerations

Keep in mind, relying on business proceeds to fund retirement can cloud your business decisions. If you can create retirement wealth outside the business, you may be able to make more objective decisions about your firm’s strategy.

Also, retirement planning for business owners provides a margin of safety. The transition or sale of a business doesn’t have to be the sole source of funding for a successful retirement.

A financial advisor or retirement specialist can help keep your business and personal plans aligned, no matter how you save for retirement. They can help you select appropriate retirement savings vehicles, determine target savings amounts, incorporate tax planning and efficiencies, and manage and rebalance your portfolio as needed.

With a clear vision, intentional planning and expert support, business owners have their best shot at “having it all.”

How Wipfli can help

Do you know the impact transitioning your business will have on retirement plans? We can help. Our teams can fill the void between your professional and personal finances to make sure tax, estate, business transition and wealth management plans are aligned with your financial and personal goals – and attainable.

Are you ready for your next chapter? Let’s find out – and get there – together. Learn more.