Seven simple steps to early retirement
If you yearn to sip cocktails on a tropical beach once you reach your half-ton, here's how to do it, writes Christopher Niesche.
It's the dream of many small-business owners to earn enough money to retire before they turn 50.
Ironically, those who do well enough to stop working early are often the type who love what they do so much, they want to keep going.
"If you look at what makes an entrepreneur successful, it's actually all about the win, it's all about being successful at what they're doing and they can't stop," internet entrepreneur Klaus Bartosch says.
Even if you're not the sort of person who wants to retire early, it's nice to have that choice, so here are seven tips on how a small-business owner can stop working by age 50.
Plan from the start
"You've got to start succession planning and retirement planning when you start the business," travel company owner Penny Spencer says. "You can't just say at 45, 'I'm going to retire at 50,' without having a plan to do that."
Spencer turns 50 this year. As the owner of a business that takes in $35 million a year in bookings, Spencer could retire if she wanted to, but she has chosen to work.
She says she put together her exit strategy about a year after she started the business, with a plan to bring in managers who could take over and run it once she left.
Work hard in the early years
Any business owner will tell you that the first couple of years are a crucial foundation for a successful business.
"There's no doubt the first two years of any new business takes one of your nine lives," Bartosch says. "It absolutely consumes and removes part of your soul and there wouldn't be any business owner on the planet that wouldn't acknowledge that."
Build a business that can be sold
Cashing out is one way to retire, but you shouldn't set out to build a business to sell it, even if that is your ultimate aim, says Bartosch, who sold his Hostworks web-hosting business to the Macquarie Group in 2007 for about $69 million.
If you're always thinking about selling, you'll be doing things for the wrong motive. "What you then tend to create is a business that's not sustainable," Bartosch says.
Brand the business, not you
Make sure all your branding and publicity efforts go into making the business well known, rather than getting your name out there.
That's the advice from Sydney-based entrepreneur Creel Price, who started Blueprint Management Group at age 25, with just $5000 in capital, and sold it within a decade for more than $100 million.
"Too many entrepreneurs become so entrenched in the business without a way to escape because its reputation is based on them," he says.
Take money out of the enterprise
A lot of business owners fail to save for their retirement, putting everything back into the business , financial planner Olivia Maragna says.
"You are taking a risk getting into business, so you want to make sure that you're actually taking money out of the business as you go through the business," she says.
The business not only has to provide for day-to-day living , it also needs to provide money for personal investments, away from the business, for the owner's retirement.
If the business can't run without the owner then it probably will be difficult to sell. Give staff more responsibility and create a succession plan you are replaceable, Price says.