Many business owners think they'll simply sell their business to cash out for a comfortable retirement, but that's not always as easy or feasible as planned. You never know how much you'll get if you sell the business. Maybe technology changes and the business is worth nothing. Valuation of a business, structuring for maximum value and finding buyers are time-consuming and require expert advice. Many businesses, inextricably tied to the owner's contacts, sales and marketing ability, have little or no value once that person is no longer in the picture.
Systematized operations allow someone else to take over the reins.
Business owners are so keyed into building their business that they sacrifice their own compensation for expansion. He recommended investing a portion of individual compensation to prevent over-reliance on the sale of the business. Then calculate what it would take to comfortably support that plan. Financial planning software can step you through the process and help chart various scenarios but requires time, discipline and enough savvy to interpret the results. If the business offers a retirement plan for employees, the owner may be restricted to using that plan for defined tax-deferred contributions, but would be free to invest in other vehicles for supplementary income.