of counsel | by carey p. berger

"My business is my retirement"

You just determined your company's contribution to the employee's profit sharing plan. Now is a good time to consider your retirement plans. Most successful entrepreneurs will say something to the effect of "My business is my retirement!" They are correct. There are at least two ways that your business is, or will be, your retirement.

One possibility is that you will spend your retirement working in your business. But remember, you really have to keep doing the entire job, not just part of it. Extra days or months away from the office are a nice idea, but if it's so easy to step away from the office, why aren't you doing it now?

As you envision your future, remember that nothing remains the same. The business you run now will have to change with the times, and if you intend to keep running the company, then make darn sure you're willing and able to learn, change, and grow. If you can't, then get out of the way and let someone lead your company before you destroy it.

Remember, too, that your risk tolerance will probably change. I wrote an article a few years ago in which I said (with a lot more detail) that the challenge of small business is not in competing product for product against the "big guys". The problem is that the life cycle of a business will not always match the life cycle of the owner of the business. Just when the business needs aggressive planning and risk taking, the owner may desire a more stable lifestyle. This "risk tolerance gap", as I have called it, is the opportunity that the big guys use to beat their superior entrepreneurial competition.

Finally, if you are going to enjoy the fruits of your labor - consider how it will impact the business. If the money for your lifestyle is going to come from the business cash flow, then it will strain your business. By setting aside funds outside your business you can enjoy some of what you have earned without the double whammy on the business of your absence and your impact on cash flow.

If you understand what you are getting in for, then it is possible to "Die with your boots on", but make sure you're not "Going down with the ship".

A second possibility is that you will sell the business to pay for retirement. If you can conceive of any reason you might ever sell the business, one of your most powerful tools is a solid handle on your business's value. Actually, even if you can't imagine ever selling, you really should watch the company value.

Value of a business is determined by the ability of the business to produce revenue and thus profits. Comparing the value of your business from year to year provides you with a broad trend of your company's strength and should give you insight (or a swift kick) for your strategic plans. Additionally, if you ever intend to sell, you will have to keep your eyes open for opportunities. If you don't know the value of your business, you won't know if the offer you just received is an offer of a lifetime or an attempt to steal your dream. You also won't know just how realistic your hopes for retirement really are.

Your business is your retirement - and the retirement for your long-term employees. As you consider your company retirement plans, your company's strategic direction for the upcoming year, don't ever forget your personal long-term goals and the impact they will have on the success of your business.

Carey P. Berger is an attorney and the president of Business Succession Resources, a consulting firm specializing in helping successful business owners Build, Enjoy, and Preserve their success. e-Mail him at cberger@bsrfamily.com or call him at 785.843.4447.