A part of the American dream is to be our own boss. Entrepreneurship is part of the DNA of being an American. We also have dreams of retiring and doing some of the things that building our independent businesses have precluded us from doing while we were building our businesses. We want to travel, volunteer, enjoy our hobbies, play with our grandchildren, and read all the books on the shelf we did not have time for. We want to be comfortable and have freedom to make choices. But will we? Is Social Security enough for those who have owned small businesses to retire on? How much capital does it take to retire, and is it easy to invest it in a manner that insures our life style when we are not working? What will your small business be worth when you are ready to retire? Do you have a succession plan that insures it will be viable into the future? If you do, then it is likely you will have the income to continue your lifestyle and give you choices, and Social Security will simply be a medium to bolster you financially. But, what if your business, like many others, is mostly dependent upon you and your family members to sustain value? In that case, your business may be saleable, but only if you come with it. While you get a chunk of cash, how will it be reporting to someone else and still be lashed to the rail? If you had visions of retiring on the proceeds of the sale and the sale is dependent upon your continued participation, how does that work?
While not a solution for every small business, the retirement fuel might come from purchasing a building for the business, let the business make the payment, and use the ongoing income or proceeds from sale of the real estate at the time you are ready to retire. My experience is that a fair percentage of small businesses have little or no value without the owner operating it. Consequently, when they want to retire, if they don’t have other sources of income, they are painted into a corner. While many entrepreneurs want nothing more than “dying with their boots on”, even if that is the case, isn’t it better to have a choice?