Small Business Blueprint: Selling to Fund Your Retirement

Trent Bradshaw CFP®, AIF® & Brandon Rogers CFP®, AIF® |

Selling Your Business to Fund Your Retirement

For many, owning a business is the American dream come true, and making management decisions that grow your business brings about well-deserved feelings of accomplishment. Playing devil's advocate here—did you decide to use any of your cash flow to fund your retirement investments?

According to CNBC, 78% of small-business owners plan to sell their businesses to fund anywhere from 60%—100% of their retirement. The biggest challenge for small-business owners is learning to divert their income from supporting their business to funding their retirement.


Owners commonly sell their businesses for any of the following reasons:

Retirement, Partnership disputes, Illness or death, Becoming overworked, & Boredom


Where to begin?

  • Selling your business starts with identifying your reasons why, making sure your business is in the shape it needs to be in to be sold, and the timing of the sale.
  • Preparing for the sale at least a year or more in advance is critical, as it gives you time to improve your financial records, customer base, and other factors that can make the business more successful.
  • Determine the value of your business so that you can price it appropriately. Consider hiring a business appraiser.
  • Make a decision as to whether you'd rather use a business broker, or negotiate the sale yourself.
  • Organize your financial statements and tax returns dating back a few years and go over the details with an accountant.
  • Finding a buyer is a huge undertaking that could stretch out several years. Once a good buyer is found, there are a series of financial screenings and other steps that need to be taken to keep the process moving.
  • Don't spend the money all at once. Take the time to work with a financial professional and determine how you want to invest or otherwise use the money.

If you want to invest now and withdrawal later:

  • Choose the right retirement plan and stick to it. Options for investing include programs like a SEP IRA, Solo 401(k), SIMPLE IRA, Roth IRA, and a 401(k). If you stick to your contributions, all will grow your money, giving you something to rely on come retirement day. Start by investing a bit of your income in hiring a professional to manage your plan, so you aren't bogged down with the complexities.
  • Opt for diversification and auto deposits. When it comes to retirement savings for business owners, opt for multiple opportunities. If you choose to launch SEP or SIMPLE IRAs for you and your team, don't be afraid to start your own personal traditional or Roth IRA. Doing so diversifies your portfolio. Additionally, set up a plan that makes auto deposits to avoid the temptation to skip investing and put your money back into the business.

If you choose to use the money from the sale:

  • Get an accurate estimate of your business value. Your business value is determined by reviewing tangible assets, employees, future cash flow potential, and the value of comparable businesses that have recently sold—much like when you prepare to sell your home. Take your estimate and compare it to the dollar amount you believe you need to retire comfortably. Doing this will reveal if selling can fully fund your retirement or if you need a contingency plan.
  • Plan now for your future sale. You need a plan today that identifies your ideal buyers and outlines any changes necessary that'll make your business attractive to them in the future. Changes should include equipment upgrades, staff changes, financial improvements, and identifying business growth opportunities—all of which will make your business more appealing to the right buyer.


Banking on the sale of your business to fund your retirement shouldn't be your only plan as a small-business owner. There's no crystal ball to display the future profits from the sale, but our team of financial professionals can show you how to invest now for guaranteed profits during your retirement. Chances are you have questions, and we're ready to help. Call us today at (704) 216-2260.


Adapted from Business News Daily and Investopedia