Hello, I’m Doug Jackson, founding attorney of The Law Firm of Douglas G. Jackson. Today, I want to talk to you about how to use your business as your retirement plan.
The American dream includes escaping the grind and being your own boss. Yet, as Business Coach Juliet Kyes of ActionCoach Tampa Bay has said, “most people are only building a job for themselves, instead of a business.” I may have paraphrased a little, but that’s the gist of it. Juliet is right. When you are your own boss, you’re not just an employee, you’re a business owner. Even if you’re self-employed and you’re the only one in your business, you’re still a business owner. As we’ve talked about in previous videos, if you’re self-employed in Florida, you’re a business; the only question is whether you’re a sole proprietor, LLC, or other business structure.
Regardless of your legal business structure, you own a business. Just like if you own a stock, ETF, or mutual, fund, you can sell that interest in the business and use it to make money. Accordingly, if you’re self-employed, you should view your business as an asset that you own because it is. You can sell off some or all interest. You can sell it to a brand new owner or your can sell off pieces of it to your employees to raise equity to invest more, or just for your retirement account. Just like you’d expect of a business of a stock you own, you should do things to protect your business, protect your branding, and make your business more saleable.
You want to make sure that your business has the proper legal structure to limit its liability. You want to make sure that you have the correct insurance. You want to make sure that you have strong contracts, proper trademarks, and the proper succession plan. A business attorney in Florida, can help you run a liability risk assessment to see how much liability exposure you have. The less liability, the more money you can make when it’s time to sell off all or just a portion of your business interest.
You obviously want to make sure you have strong financial and accurate bookkeeping. A professional can help you with this, too.
It’s also not a bad idea to hire a business coach, such as Juliet Kyes or a Business Broker such as Gregg Potter to help you as you prepare to sell. It’s not uncommon that it will take about a year or two, or sometimes more, to get your business truly ready to sell.
Finally, when you’re ready to sell a portion or part of your business, your business will be in good shape. You can prepare a plan and execute a legal closing of the sale. You can determine whether you want to sell just some of your business employees, and you can still have controlling interest. This way, you will still run the business, but you will have more money in your pockets or in the cash reserves of the business, depending on how you structure the sale, and your employees who own the interest will have more invested in the company. You could sell off the entire business to either your employees or outside buyers. Especially, if you are selling it off outside, it may be a good idea to contact a Business Broker, such as Gregg Potter, who can list your business and get you more competitive and higher price for it. It’s not uncommon for businesses to go higher than two times (2x) the annual revenue, depending on the business and its financials. If you really want to sweeten the deal, you can even have a structured buyout and a contractual provision where you are paid as a consultant for a period of time.
Hence, don’t just wind down your business and retire, sell it. Treat your business like an asset. You wouldn’t just quit your house, you’d sell it. You wouldn’t just quit your stocks, you’d sell them. You wouldn’t just quit your 401k or IRA, you’d cash it out. Don’t just quit your business, because it’s not just a job, sell your business and make money off of it like the asset it is. After all, you put your sweat and hard work into it to build it. Too many professionals just wind down and quit their assets instead of selling it. Attorneys have done it, accountants, realtors, home inspectors, doctors, dentists, financial and investment advisors, graphic designers, product and promotions designers, printers, pet sitters and dog walkers, lawn care businesses, and so many more. Whether your realize it or not, you didn’t just build yourself a job, you built yourself a business. Utilize the retirement asset you created, and don’t just wind it down, sell it!
And remember, get your legal action with the Law Firm of Douglas G. Jackson.