Entrepreneurs spend a lot of time figuring out how to succeed in business. But when it comes to their own personal financial situations, they tend to let things go.
… a new survey of business owners … concludes. Nearly half of poll respondents — 667 owners of firms with revenue of $5 million or less — say they lack a personal financial plan. Furthermore, about a quarter of participants who built a company from the ground up plan to fund their retirement by closing their business.
However, the survey also found that some of the business owners would not have enough to cover their retirement needs.
Owning a small business involves much more risk than business owners often realize. It’s like planning for your retirement by owning a single stock. What happens to the retirement plan if the stock drops? The same thing happens if a small business falls on hard times. It’s called putting all your eggs in one basket. Unfortunately lots of things can go wrong, and many of them are outside of the business owner’s control.
Small business owners need to realize that depending on the business to provide for their retirement income needs is too uncertain. They should think of themselves as employees who need to plan for their eventual retirement independent of their business. That way, if the business succeeds they can walk away with even more money. And if it does not, their basic retirement plans are secure.
Arie J. Korving, a CERTIFIED FINANCIAL PLANNER™ professional, has been delivering customized wealth management solutions to his clients for more than three decades. Prior to co-founding Korving & Company, he was First Vice President with UBS Wealth Management and held management positions with General Electric.