Making your business work for you: making enough to retire
- OneTeam
- May 30
- 3 min read
You may love running your business. But in the back of every owner’s mind is the knowledge that one day you’ll need to sell the company and retire.
But with global markets in upheaval and the future less certain than ever before, how can you guarantee that your business will be worth enough on the open market for you to retire?
In this series, we’ll look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals, now and into retirement.
Building a business to support your retirement plans
Your business should serve as the nest egg that offers the equity for your retirement. But how can you ensure this nest egg, along with the business's value and your retirement plans, are secure?
We've outlined five strategies to enhance your business's value, ensuring that when you decide to sell, you'll receive the return on investment (ROI) necessary for a comfortable retirement.
Create a business that operates independently of you
While you may be the boss, it's essential for your business to operate independently of you to retain its value during a sale. To achieve this, consider systematizing your operations, ensuring that daily procedures are documented and scalable as the company expands.
It's crucial to develop a robust management team capable of sustaining the business operations in your absence. This independence greatly enhances the company's value, as prospective buyers seek businesses that will remain stable without the founder.
Concentrate on consistent revenue sources
Recurring revenues provide greater stability for your business. Consider concentrating on subscription services and other reliable income streams to enhance the company's value.
Recurring revenue significantly boosts business valuation multiples, often making them 2-3 times higher than those of transaction-based models. Establishing a stable and valuable business allows you to sell the company at a premium price, giving you the equity necessary to finance your retirement.
Invest in intellectual property and licensing
Possessing valuable assets within a business enhances the company's potential value. Intellectual property (IP) and brand equity are two intangible assets that can greatly influence the company's value and asking price when it is offered for sale.
Think about developing products, processes or technologies that can be patented and then licensed to other third parties. This is a great way to use your IP effectively, boost your brand and create passive income – something that will appeal strongly to any potential buyers.
Keep detailed records and keep finances healthy
A viable business with a good financial health score is the holy grail for buyers. So keeping your financial health, company credit score and cashflow position under control is vital.
Maintaining strict financial tracking and closely monitoring your key financial metrics is crucial. Having well-organized financial records with 3-5 years of solid profitability enhances your business's appeal to buyers, potentially leading to higher valuations and improved ROI..
Develop a strategic exit plan well before retirement
The key to a successful exit is having an exit plan in place as early as possible. Work with your advisors to add value to the business, identify ideal buyers and find the most tax-efficient exit structures that will deliver the funds you need on retirement.
To ensure a successful exit, it's crucial to establish an exit plan as early as possible. Collaborate with your advisors to enhance the business's value, pinpoint ideal buyers, and discover the most tax-efficient exit strategies to secure the necessary funds for your retirement.
Helping you secure your income and lifestyle
After years of managing and expanding your business, you deserve a peaceful and comfortable retirement. To achieve this, it's crucial to begin planning now and prepare your exit strategy.
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