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  • Writer's pictureTimothy M. Foster

Will Your Business Exit Strategy Result in a Fully Funded Retirement?

Updated: Nov 9, 2020

How Much Money DO YOU NEED for a Fully Funded Retirement?


Think about it, an army plans its extraction before it ever invades. A well-prepared manager or coach would never take the field without a carefully crafted game plan. So, in the perfect world, every business owner would have a well-designed and implement business exit strategy before they ever open their doors. Well, welcome to the real world! But after 2020 perhaps you’ve realized – it’s time to finally get a Business Exit Plan in place.


From our decades of experience, we have learned that the great majority of business owners lack sufficient retirement funding to support the lifestyle that they worked very hard for and dream about for their retirement. Of course, many of you are hoping to “bridge the gap” of the shortfall amount by banking on financing the majority of your retirement funding with proceeds from the sale or transfer of your business.

Like many of the clients we have engaged, this approach proves to be problematic and can greatly delay your exit, even after you determine its time to go... It’s been a “buyers” market for a long time – as many business owners have found out after engaging one of those quasi-business broker companies that claim they have “many buyers lined up to by YOUR business” unfortunately, those prospects are proved to be a used car salesman-like promise that never materializes after you’ve forked over your hard-earned money.

Just like owning a business – there at no shortcuts or quick fixes to the exit planning process. You win by being proactive. Taking full advantage of the years between now and your exit AND taking advantage of advanced business, tax, and legal planning strategies. Those “in the know” take advantage of this type of planning.

  • Can you afford to continue to fall behind on this critical area of business planning?

  • What’s the ultimate cost of inaction or delay?

So Where Do You Start? >

Well it must begin with a well devised and implemented proactive plan, but a driver in your planning has to be how much money you’ll need to fully fund your retirement years based on both your life expectancy and desired lifestyle. Will you need a continued income from the business for a certain number of years? Due to the tax ramifications to you and the continuing business - strategic business, legal, and tax planning is critical. It will make a huge difference in the amount of money that ends up in your pocket, after taxes, at the end of the day.

It’s important to point out here that the planning strategies and technics are significantly different depending on your available and potential options for some day exiting your business.

In my decades of experience of working with hundreds and hundreds of business owners, my biggest take away is that very few are aware of how many options and advanced tax-friendly strategies are out there for them to take advantage of.

Too many times they have only been advised on one or two that would be a tremendous – and unnecessary – compromise in view of what in reality they would like to do, if they had been made aware that it is actually available for them.

And do you know what the worst part is??

When I talk to business owners about their go-to default method that “someone advised them to do it this way” its clearly the most expensive method in terms of taxes that will be paid them personally, their family, and the company that could possibly be designed.

And please don’t continue to put this planning off. A well-designed, well-funded Exit Strategy does NOT put a termination date on you, it actually provides many more options to exit, whenever you decide its finally time to exit. Remember, there are situations, outside of your control – health, family issues, or a COVID-19-like pandemic situation that may force the decision involuntarily.

So, a very critical part of your Strategic Business Exit Plan is an accurate as possible calculation of how much you really need to properly fund your retirement. What this really means is that you know how much you need to fund you and your family for the remainder of your life.

Money may not buy happiness but it can buy freedom and security. And those two things contribute significantly to being happy. Perhaps because having money provides a sense of control over your life and who doesn't want that?

Money is a difficult subject for most people to talk about. It is a highly emotional and personal topic. Society has unfortunately created certain "taboos" on the subject of talking about money - how much you make and how much you have. Often you believe it's just better to not talk about it with your friends and family.

But in any long term planning – how much money you have and how much money you will ultimately need is a critical consideration. That's where Exit Planning truly begins. There are several moving pieces here and they all need to be considered together to calculate if you have enough.

The Key Components are:

> How much you will spend each year? Spending is dependent on your specific goals and objectives. Not just for your business, but your life. What type of life do you want to have? Imagine your life and make a budget that allows you to live it. Remember, to add in something for unexpected expenses - things you can't control or plan for such as health issues, family emergencies, or any other unexpected expense

> How long will you live? Only the Almighty knows the ultimate answer to this question. But there are actuarial resources that can give you a general guess given your current age, health and so on. When you plan, it is important to over-estimate your lifespan, particularly if you have some long-lived relatives. For planning we usually recommend considering the possibility of living to 100 and beyond. You may not live that long but who wants to be in their 90s, in good health, and faced with the fact that their money is running out. Given current and near term medical advances – this is becoming a too real issue for many people – just don’t let this happen to you.

> What sort of legacy do you want to leave behind? Do you want to leave something to your family, grandchildren, or a charity after you’re gone? What would you like to see achieved after you’re gone? What will be your legacy? Most business owners want this factored into the calculations and planning strategies.

> How much money have you saved to-date plus what can you get from your business? Your assets are where your income will (mostly) be coming from in retirement. You need a comprehensive personal net worth statement that includes an accurate and reliable business valuation. It is likely that your business is one of your most valuable assets. Your business may be the very best way to increase your net worth by increasing the market value of your business. So let us help you take a hard look at your business and its potential market value!

I recall reading an article quoting a well-known investment firm who had asked their clients what they think is enough money to retire. The respondents said that to be financially comfortable requires an average of $1.4 million. To be "wealthy" requires $2.4 million. The responses varied somewhat, but there’s no doubt, the older a person becomes more money they think they’ll need in today’s world.

Perhaps most importantly, most of the things that respondents said made them rich were not monetary at all - Like spending time with family or having more time for themselves traveling or doing something they enjoy.

The first step is to do an Exit Plan, a plan that gets you thinking about all of these things. And most importantly, implement your exit plan now so time will be on your side. Communicate your plan to key employees, business partners and family members.

We can Help, Call me with your questions and thoughts. We’re happy to talk to you about our experiences and confidentially discuss what opportunities might be available to you. Talk to an experienced exert – not a salesperson!

Call us for a confidential consultation.

Timothy Foster, JD, MS Taxation

Managing Member

3Pi Group, LLC

3PiGroup, LLC and Plan My Business Exit, LLC are professional services firms dedicated to providing superior individualized and custom service to individuals and their businesses in the areas of sales enhancement, asset protection, tax planning, exit strategies, and wealth building. Simply put – we want to educate you on all relevant opportunities to put more dollars into your pocket, your business and your future.

We focus on leading edge, sophisticated, and safe business strategies that will help business owners structure, operate and maintain their business to take advantage of business and tax laws rather than being encumbered by them. We partner with the business, the accountant, and the attorney to ensure the business owners are capturing all available benefits that align with their business and personal goals.

Call Us Toll Free: (888) 938-2975



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