Owning a business can be a very rewarding experience. Many will buy an existing business or start a new business with the thought of building the business to the point that it is a successful viable entity that they can sell and live comfortably on the proceeds.
There currently are millions of small business owners in various stages of planning the exit of their business. I want to sell my business so I can retire comfortably. There are also millions of aspiring entrepreneurs that are considering buying or starting a business with the goal of building it and growing it to the point they can sell it and retire comfortably. It seems so often when discussing what one does it is described as working or retired (in today’s economy un-employed, looking for work is another status.)
I believe there is a status between working and retired, and I refer to it as Hybrid Retirement. I certainly don’t see myself as any retirement expert or financial planner, but I have been through the process of selling my business that I had for 20 years and have developed my own views on retirement that possibly one going through the daily work day does not have the time to consider.
My current profession is as a business broker in Florida. Within my community I am surrounded by retired people, and also after the sale of my business I did take “some time off.” As a business broker I speak to many business owners considering the sale of their business. One of their top considerations is “If I sold would I have enough to retire?” Why not aspire to Hybrid Retire.
I personally think the majority of those currently working full days either employed or as small business owners look forward to the day they can retire, stop working, and spend the rest of their days fishing, golfing, or hobbies. Of course your age at the time of cashing in can greatly affect your decision process. If you are 75 years old, maybe you say enough is enough and just head to the golf course. But if you are fortunate to be successful and exit in your 40’s, 50’s or maybe even your 60’s your perspective, and needs could be greatly different.
The thought process for someone thinking of selling a business goes something like this:
I think I need to sell my business, walk away with $500,000 and that will be enough for me to retire. But what if you had someone that would buy your business and allow you to walk away with $400,000? Maybe this is a good time to entertain such an offer and consider Hybrid retirement. If you believe you need $50,000 per year to live off of, and the sale of your business may give you $35,000 to live off of, should you walk away or consider?
Many small business owners get overburdened with the responsibility of owning a business, and really want to sell those responsibilities away to others. Maybe making the $25,000 monthly payroll or covering the $100,000 per month fixed overhead cost month after month just gets to be too much. Perhaps you can consider upon the sale of your business, you can find another business to buy, possibly one that you have aspired to do for years, or possibly work for someone, under terms conditions that fit your lifestyle. But this second business you don’t need to make that high monthly expense, and now you are supplementing the proceeds you have from your sale, and what you need to draw from the business is a lesser amount. “Needing” to make $15,000 per year instead of $50,000 can be somewhat liberating!
Why Hybrid Retirement?
- Do you really know that you can “do nothing” after working for 20, 30, 40+ years
- You have someone looking to buy your business near the price you think you need. maybe consider the offer and plan to supplement the difference with a second career, part time job, etc.
- This is an opportunity to build a profession around your lifestyle, whereas before you may have had to try to build a lifestyle around your business.
- Are you really prepared to try to live off a “fixed income”? Supplement that with something you aspire to do.
I think currently due to economic condition there are many small business owners delaying the exit / sale of their business because the recent performance of their company may not allow them to achieve the “walk away” money they believe they need to retire comfortably on. There also are eager entrepreneurs ready to start a new venture with hopes of one day selling and retiring off the proceeds. Maybe planning for both of the above scenarios can best be addressed by allowing yourself to consider Hybrid retirement.
Image: Mark Stivers