Helping Business Owners Retire

Commercial Finance Assist Business Finance Adviser
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Helping Business Owners Retire

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Helping Business Owners Retire

Did you know that small business owners control over four million businesses and are about to retire at some point? An overwhelming majority of these owners, or at least 75%, have no succession plan in place. Without a proper succession strategy and retirement planning, it will be tough to say how the chips will fall.

This is where an equity investor comes in.

Retirement is a high-wiring act that requires several measures to ensure you are comfortable long after hanging up the gloves. Successful ownership transition requires a two-pronged strategy:

  1. Succession Planning: to ensure you choose the right successor who can take charge
  2. Financial Planning: to ensure you are all set after retirement and won’t ever have to worry about cash flow again

An equity adviser, can help business owners craft an exit strategy from their business. They will help you convert the business into tangible value that can be used in retirement.

Planning an Exit Strategy

Young college grads with weeks old companies don’t need exit strategies. But seasoned entrepreneurs should get the ball rolling on their retirement plan as early as possible. Creating an exit plan now for the inevitable day will save you a ton of stress when you finally decide to move on.

Before you can develop an exit plan, it’s important to ask your self three main questions:

  • How many years do you plan on staying involved with the business?
  • What are your retirement goals in regards to finances?
  • Do you have to pay off debt before exiting?
Steps to Develop an Exit Plan

Once these three questions have been answered, your equity investor can then explore every available option with you the business owner. This will be an emotional rollercoaster for many people, but planning the right exit strategy requires due diligence and expert opinion.

The right exit strategy involves the following six steps.

1. Consolidation of Finances  

The first step for an equity investor is to audit your private and business finances. Ask you where they want to end up in life - do you want to live a modest life in a humble apartment, travel around the world in your own yacht, or something in between? Knowing the end-goal will make it easier to put the right plans in motion.

Create measurable, specific, and realistic retirement goals so you can achieve the lifestyle they envision.

2. Create Your Retirement Portfolio

It’s not a good idea at all to rely solely on proceeds from selling the business. Instead, you should diversify your retirement portfolio opening one or several retirement savings accounts as early as possible. These retirement plan options can come in the form of IRAs, 401(k)s, SEP IRAs, or a combination of these types.

Equity investors can put together an ideal retirement portfolio that puts you the business owner on track for retirement without compromising your envisioned lifestyle or current cash flow. The key is to balance access to a high-income level and high liquidity needed to survive bear markets.

3. Create a Support Team.

It is important for you to consult the right professionals to avoid hiccups along the way and plan a smooth retirement strategy.

In addition to working with an equity investor, business owners should get in touch with the following professionals:

  • Business attorney: This person ensures that all contracts and the business entity are structured and executed correctly. This facilitates exit from the business without any complications.
  • Accountant: This person minimizes the client’s tax liability.
4. Choose a Successor

It’s time to create a succession plan. The first step is to screen several candidates who can carry on the mantle long after your retirement. Many small business owners don’t have a succession plan in place. But planning to leave the company and knowing who will take charge, is important for your own future and that of your business.

A business owner can’t just take off and leave – that is the quickest way to undo years of hard work. You may want to pass the company down to your children or other family members. Beyond real estate planning issues, you may want to get advise on a buyout strategy that creates value for them in a way that doesn’t financially cripple the business in the future.

In addition, you may want to sell the business to senior members of the company. This requires a plan where these employees would pay you for the business in a way that doesn’t bankrupt it but still lets you derive sufficient value from the proceeds.  

Alternatively, you could implement an employee stock ownership plan (ESOP). This allows employees to become beneficial owners and provides tax advantages to you the business owner.

5. Create a Target Exit Date

The planning process includes having to decide on a target date for exit from the company. While this target date may change in the future, having one in place makes it easier to facilitate the transition to the new owner and any other planning steps that may be needed. 

6. Transferring Customer Relationships  

Finally, it’s important to move customer relationships to the new owner and getting them properly acquainted. These customers have been with the company through thick and thin, so it’s only right to give them a heads up. If they’re not too keen on continuing their relationship under new leadership, you should inform them about alternatives – that sounds counterintuitive, but it’s the right thing to do. 

Wrapping Up

For small business owners, preparing for retirement takes considerable planning. It’s never as simple as setting aside a small percentage of their paycheck into a retirement savings plan. Planning an exit strategy early on is the best way for you to achieve your dream of post-retirement luxury.

To find out how equity investors may be able to help you retire from your business, please contact us.


Ron Whitcher of Commercial Finance Assist at info@cfaequity.co.uk





  • Retirement Planning
  • Succession Planning
  • ownership transition
  • equity investor
  • successful ownership
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