Here, we’ll take a closer look at some of the most common mistakes Arkansas business owners make when planning for retirement.
“My Business Plan Will Cover the Costs of Retirement.”
A great many entrepreneurs have already had their first taste of success and think their business is all they need to cover the costs of retirement.
It doesn’t matter whether you are growing a small business or dominating your local market: unless you have your own HR department micromanaging your finances, your retirement demands its own plan. You should consider:
What’s your ideal retirement?
Ask yourself what you want to do in retirement, where you want to live, and what standard of living you’d like to enjoy. Are you going to keep living in the same home, relocate to a property in the Ozarks, or move somewhere out of state? People all too often underestimate the savings they need to keep the comforts to which they have grown accustomed.
How are you going to budget for your retirement?
You could put money away every month, establish an investment retirement account (IRA), or structure a business-specific pension plan. However, irrespective of which route you take, you need to consider the long-term financial and tax implications of your particular strategy.
Who’s holding you accountable?
Business owners are naturally busy. If you have regular expenses—related to your enterprise, family, or home—you might be tempted to start saving less than you should. You need someone, or something, to hold you accountable to the retirement plan you choose.
“I Have a High Net Worth and Don’t Need a Retirement Plan.”
If your business is worth a lot of money, you might think that resolves any concerns you could possibly have about retirement. Hopefully, you’re right—if you’ve worked hard, you deserve to live out your golden years in comfort.
However, a high-value business doesn’t guarantee that everything will go according to plan if:
- The market changes, causing your product, commodity, or service to lose value.
- You try to sell your business to fund your retirement but find out that it’s not worth as much as you’d anticipated.
- A family tragedy or other unexpected event forces you to sell your stake in a business or cease operations entirely.
“I’ll Sell My Business and Use the Profits to Retire.”
You could be earning a veritable fortune in your field, but that doesn’t mean your business is going to yield a fortune once it goes on the market. Statistics suggest that up to 80% of companies put up for sale never actually sell. Without a backup plan, you risk:
- Leaving your family, friends, or business partners with a company that suddenly lacks leadership and ends up dissolving sooner than you’d expect
- A prospective new owner who can’t afford to pay the price you might deserve
- An owner who runs into financial issues and defaults on a loan or otherwise can’t meet the terms of your agreement
“My Family Will Take Care Of Me.”
Many Arkansas businesses are family-owned. Farms, in particular, tend to be intergenerational endeavors: if you’re in agriculture, you may have inherited your land from your parents and intend to pass down the enterprise to your children.
While this sort of retirement can work, you risk losing a comfortable retirement if:
- Your children or other relatives want to start their own business or have already started working in a different field and don’t want to learn your trade.
- Your heirs aren’t as responsible as you and can’t manage to pull the same profits.
- Your relatives aren’t willing to part with their newfound wealth, even if you’re the reason they have it.
- Your family simply isn’t as good at running your business as you were.
“I Can Do it By Myself.”
Perhaps the biggest mistake Arkansas business owners make is thinking they can plan their retirement all by themselves.
Even if you’ve already identified a viable strategy, you need a wealth management specialist’s assistance. When you try to do everything on your own, you:
- Might not ever develop a realistic retirement plan
- Implement the wrong business succession strategy, putting your enterprise at the mercy of courts or creditors
- Miscalculate the tax burden of selling a company, and end up with substantially less money than you expected
A wealth management specialist, financial adviser, or business attorney could help you identify any potential loopholes in your plan—not only improving it but suggesting additional solutions to ensure you get the retirement your hard work deserves.
You Deserve Your Dream Retirement—Send Quraishi Law a Message Today
Quraishi Law is an Arkansas-based and Arkansas-focused firm that is dedicated to providing Diamond State entrepreneurs with the solutions they need to live a happy, healthy retirement. Our specialized team has experience in law, business planning, and wealth management, ensuring that your business, retirement, and savings flourish together.
You don’t need to sacrifice your future for the sake of the present. Send Quraishi Law & Wealth a message online today to schedule your initial consultation.