Mind Your Business: Planning for Retirement

By Steve Michaels

July/August 2008

Q.  I am a baby boomer, and the retirement years are looming large.  I have one to two years before I want to retire.  Do you have any suggestions for an exit strategy?

A.  Begin by finding out what your business is worth from a reliable source.  Next, look at what you can do to improve the bottom line.  This is not the time to purchase expensive equipment, but rather a time to cut any dead wood, do a rate increase, and trim your sails.  You want your business to show proven profitable EBITDA figures for the past year.  Call your attorney to set up any legal structures that might maximize profit and protect your assets.  Also, give your attorney the name and number of a reliable broker who has your information and can proceed with the sale in case of your death.  Finally, call any of your other trusted business and financial advisors for their guidance. 

If your family is involved in the business, talk to your accountant to determine the best way to pass on the business.  If you are going to sell it, mentally go through the sales process to see how the sale could affect you and your family’s tax position in order to maximize the sale proceeds.  For example, if you are a C Corp, you will be double taxed, so this consideration should be taken into account when pricing your business.  You will probably want to take a note back for consulting, as this will put more money in your pocket.  Items like this will often increase the value of your business and should be considered before it goes on the market. 

It is best to plan from a place of balance in your life where your business and personal matters are doing well.  Emergencies such as poor health, financial issues, or family problems are not the time to make important decisions.  Poor choices come from reactive decisions caused by stress, seriously undermining one’s retirement.  Have a plan in place; then, if you do have an emergency you won’t be making desperate or questionable judgments. 

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or tas@tasmarketing.com for questions.  His Web site is www.tasmarketing.com.