With so much to contend with in starting and running a business, it’s difficult for business owners to see the forest through the trees. The notion of spending the time and resources to create a long-term financial strategy is often lost on business owners who are struggling to get into or stay in the black. However, the earlier you can start planning, the greater the advantage of time you will have.

If you can think of your retirement plan as distinct stages of your business, it’s easier to plan sequentially using just the knowledge, resources and mindset needed for each one. Rather than aiming for some distant target that is likely to change periodically, you can establish more meaningful benchmarks with shorter timelines. By planning for a secure retirement through the stages of your business, you can set more achievable goals and gain confidence and motivation with more frequent accomplishments.

Early Stage

Set realistic goals – You won’t hit your targets if you can’t see them. The most important financial goal you can have is to create lifetime income sufficiency for when you are no longer able or willing to work. Certainly, it can be a moving target, but it’s important to have a minimum target you can be sure to hit along with the higher target you want to aim for.

Take advantage of the time value of money and save early and often – If you have no other strategy, the time value of money is the most important concept you need to embrace. For example, a business owner in his late 20’s or 30’s, totally consumed by the demands of his business, might still find a way to set aside just $300 a month into an IRA mutual fund that averages a 6.5% return. If he increases the monthly deposit by 10 percent each year and he does nothing else, invests no more money towards his retirement, he would still accumulate more than a million dollars in 30 years. Such is the value of time.

Growth Stage

Invest in yourself – Businesses in their growth stage often need a continuing and growing influx of capital to meet operational demands, which is why many business owners keep their money in their business. But this is a critical time to start diversifying your investments, and the best way to do that at this stage is to start setting funds aside in an employer-sponsored retirement plan. Your business will lower its costs with reduced taxes and higher employee retention. More importantly, you will benefit by being able to set aside up to 25 percent of your pre-tax, net income or $52,000 into a qualified plan (depending on the type of plan).

Mature Stage

Know where the exit is – With an established business, and your retirement time horizon growing shorter, it’s time to achieve as much diversification as possible. If you own 100 percent of the business, it may be time to launch a divestment plan – finding a partner or investor, or establishing an Employee Stock Ownership Plan. You can still hold a controlling interest while you take greater control of your retirement. At the very least, you need to incorporate an exit strategy into your retirement plan, detailing how you expect to walk away from your business with as much financial security as possible.

Final Stage

Find the exit – Many business owners don’t envision themselves not working in their business. But, it’s not always up to them. Their health or the health of the business will often dictate their tenure. An exit strategy should include contingencies for an early exit as well as an extended stay if it’s still in the best interest of the owner and the business. However, having pieced together an incremental strategy through the early, growth and mature stages of the business, a business owner will have created a separate source of lifetime income sufficiency.

While it may be difficult for a business owner in the early or mid-stage of a business to eat the whole retirement planning pie at once, taking an incremental approach as you move through the stages may be easier to digest and even more realistic in the face of uncertainty most businesses face. In any case, having a savings safety net is the very least a business owner needs at any stage.


Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites.

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank.