By Michelle van Schouwen
As Gretchen Rubin famously wrote in her bestselling book The Happiness Project, “The days are long, but the years are short.” This affecting truth applies to business as well as personal life. As small business owners, we deal with vexing issues, small and large opportunities and forks in the road every single day. We often get home late, tired and sometimes unready to begin again the next day. And somehow, despite – or maybe because of – all this activity, the years flip by faster than we could have expected. One day, sooner than you might imagine, you may want to retire. Or, you may need to.
That leads me to the best inadvertent retirement planning advice I ever got. It was inadvertent because it wasn’t given in the form of advice at all, but was in fact a string of stories from a valued longtime client. (I’ll change a few details where required to protect privacy.) This particular client was one of many successful small businesses for which my company provided marketing. This company was run by smart, energized partners with powerful tech skills and a keen eye for market trends in their sector.
The company thrived for years, but then hit a serious roadblock as one partner underwent personal issues and required a buyout (likely in accordance with the company’s partnership documents). This expensive buyout knocked the company back. Worse, it was followed by serious changes to the market, changes that required the company to revamp and to add completely new opportunities and customers, a process that proved to be slow and cumbersome. All of this was happening as the remaining partners were approaching retirement age.
One day, one remaining partner announced that he and his spouse were about to retire and travel the world. As he talked about his plans, I was aware that they were expensive ones, and I wondered silently how they were able to pull sufficient money out of a now-diminished company. As if reading my mind, my client said, “My spouse took care of our personal finances all these years, and made sure we put money away from the start. I can’t tell you how grateful I am now.”
This, then, became the “inadvertent advice” I internalized and developed into my own rules for the long road ahead. Takeaways include:
-Don’t depend on a big cash payout from the company to fund your retirement. For the purposes of retirement planning, you may want to value your business at ZERO. If you are wrong, you will be pleasantly wrong.
-Set up your IRAs, 401(k)s or other retirement accounts early and fund them generously every year, especially during the early years when your money has the most chance to grow. If you have a low-income year, consider investing in a Roth IRA. Accumulate non-retirement savings as well.
-Business suffering tough times? Do not spend down your retirement (or other) savings to rescue a flailing or failing company. Work to separate your business and personal goals.
-Partnerships are dangerous. Plan and negotiate them with extreme care, so a departing partner cannot become your downfall. Talk with your attorney and financial advisors about buyouts and other potentially expensive clauses in any agreement.
-Your health or even your desire to run the business could flag well before age 65. Don’t be overly optimistic about your working timeline. Plan so you could retire early if needed.
-Not everyone has a spouse or life partner who is fiscally adept, truly loyal and prepared to do all this financial management. The buck stops with you.
Planning prudently doesn’t preclude simultaneously running a daring, high-growth and potentially highly valuable business, but it does mean you have your own personal insurance against some of the crippling financial hazards you may encounter along the way.
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Michelle van Schouwen enjoys an “Act 2” career as principal of Q5 Analytics, providing advocacy and communications for climate change mitigation and adaptation. See Q5analytics.org. For 32 years, Michelle was president of van Schouwen Associates, LLC (vSA), a B2B marketing company. In 2017, van Schouwen Associates was acquired by Six-Point Creative Works, Inc. of Springfield, MA. Michelle is available for speaking engagements on topics including her new work on climate crisis mitigation and Florida coastal water issues. She speaks to business and student groups about marketing launches
