Karina Gray is Arizona Small Business Manager at Wells Fargo.

Becoming financially stable so you can live comfortably in retirement is a goal that many of us spend our entire careers working towards. This is particularly true for small business owners who have spent their working years running a business with the intent to eventually retire. Fortunately, according to a recent Wells Fargo/Gallup survey, 82 percent of small business owners said they are currently saving or investing money toward their retirement, and 76 percent said they think they’ll have enough money to live comfortably in retirement.

While it’s great to see that most small business owners are thinking ahead and saving for the future, there are other areas that should be addressed when preparing for retirement. Here are four tips for small business owners to consider as they plan for retirement.

Start with a succession plan

Even if your plans to retire or transition your business are distant, planning for your company’s future now will help you in the long-term. It’s a great idea to create a transition plan while you’re writing or updating your business plan. Whether you want to sell the business, or pass it on to a family member or an existing employee, you will need a clear strategy that outlines your plan. A successful transition plan with a schedule and overview of roles and responsibilities will help get you on the right track.

Max out your savings
As you map out your retirement savings strategy, it’s helpful to take a long, hard look at your current finances to determine how much money you can afford to put aside each month. Once you have a savings goal in mind, set up an automatic monthly transfer into a savings account and/or self-employed retirement plan. Regardless of the size of your business, there are a variety of retirement plans that can meet your needs. Individual 401(k)s are designed for one-person operations, while businesses with a few employees may benefit from a Simplified Employee Pension Plan (SEP-IRA), and businesses with up to 100 employees may consider a Savings Incentive Match Plan for Employees (SIMPLE IRA). There are also many options available for business owners under the umbrella of a traditional 401(k). Talk with your financial planner or accountant to learn more about each plan and understand the best fit for you and your business. You can also find out more at the IRS’s Tax Information for Retirement Plans Community.

Build an emergency fund
In addition to your retirement savings accounts, it’s important to maintain an easily accessible emergency fund for your small business. No matter how well you plan, the unexpected can happen and having cash reserves is an important component of your overall financial picture. Start by putting cash aside when profits are comfortable, and if you can swing it, allocate a portion or all of your tax return into this account. If, and when, you need to access these funds, pledge to put back what you take as soon as possible. While there is no definitive amount for how much money you need to be putting aside, most people agree that an emergency fund should have enough to cover between three to nine months of your basic fixed expenses.

Know your business’ worth
If selling your business is part of your retirement financial plan, then you need to make time for the proper business valuation process. Even if you think you know the value of your business, only a professional appraiser can truly put a number to it and say how much your business is worth to an outside buyer. Make sure to hire an experienced appraiser, and consider starting the process early. If the value is less than what you expect, having time on your side to make adjustments in your business and then requesting an updated valuation could increase the worth. When you are eventually ready to sell your business, determine whether you want to work with a business broker or independently. While there are fees associated with using a business broker, they can often get you a higher price than you could on your own, and will be there to guide you through the entire process.

As a small business owner, there are many important steps you can take now to get your finances in order and enjoy a comfortable retirement.  The key is to get started early and stay committed to your long-term vision and goals.


Karina Gray is vice president and regional sales coach manager for small business at Wells Fargo.