Your Business and Your Retirement

Trapped in the Rat RaceIt’s no secret that, from a financial perspective, these last ten years have been “interesting times” to live in both in the United States and worldwide. The financial markets have been less predictable than during earlier, more stable times, the economy took a plunge and then recovered somewhat, and the restructured business climate with its less generous benefit compensation has forced the worker to take on more risk both in the present and in the future. So what does this mean for the retirement of the average business owner?

That’s the challenge, isn’t it? As they approach retirement age, many older workers are finding that they are not nearly as prepared for living on a lesser income than they had hoped or planned to be. Since the majority of owners have a significant proportion of their life savings invested in their businesses, it’s imperative to know what their businesses are valued at so they can better plan for retirement – even if the market fluctuates and that valuation may not be a constant over time.

To this end, any business owner who is contemplating retirement, even down the line, should hire a good business appraiser to have a baseline idea of what kind of money they will have to work with in retirement. It’s quite possible that having an appraisal done will reveal a different valuation than expected, but the good news is the discovery of lesser value made early on can inspire changes in management that can be profitable both now and later.

While it is important to be mindful of what the market is like when deciding whether to sell and when, problems like owner dependence or a lack of consistent revenue stream will always lower value because a buyer will see weaknesses that do exist and are not temporary or trivial. It’s always a good idea to think like a potential buyer when deciding how to change a business to make it more profitable or owner independent.

To this end, we at Calder Capital are happy to meet with clients when they begin the process of deciding when to sell – so that when it comes time to put that business on the market, it can be sold for a higher price. We often discuss the concerns of our clients and how they may be dealt with or solved in advance. Whether this involves how an owner can reallocate responsibilities to the management in place or how employees might handle a change in ownership, we’ve been through the sale process before and know what the usual challenges or worries are.

If you are concerned about your retirement and how your business factors into your financial planning and would like to talk about the steps to take before and during a sale, we would love to hear from you.

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Calder Capital, LLC