Retirement as We Know It Is Dead. Here’s What Business Owners Are Doing Instead
Content was originally published on Inc.com on January 8, 2019.
In the past, owning a business was the epitome of the American dream. You worked for yourself, you made your own hours, you had control over your wealth, and eventually you got to sell the business (or pass it down to your offspring) and buy a little beach house in Boca Raton. The perfect way to spend your golden years.
But in today’s business arena, the face of retirement as we know it is changing. No longer do smart entrepreneurs dream of settling down on the beach and taking it easy. Instead, they learn to scale and passively own their businesses for a continued stream of income for the foreseeable future.
Why are smart entrepreneurs rethinking retirement?
1. We Are Living Longer Than Ever Before.
The average person born in 1960, the earliest year the United Nations began keeping global data, could expect to live to 52.5 years of age. Today, the average is 72. So you have to ask yourself, will that million-dollar business sale stretch an extra 20 years? Or will you end up broke in Boca Raton? Now, imagine if you were able to take out a salary of $250,000 a year for 20 years — without ever stepping foot in the office. That’s the equivalent of a $5 million sale, all things being consistent. What if you were able to grow that business over those 20 years? It could be the equivalent of a $20 million payday.
2. Retirement Boredom Is Very Real.
Entrepreneurs are a special breed. We thrive on excitement, innovation, and growth, and that doesn’t suddenly turn off when you decide to retire. I have seen many business owners retire, only to start up a new business within the first two years after a sale. There are only so many crossword puzzles someone can do before they crave mental stimulation. Could you remain stagnant for the next 20 years?
3. It’s Easier to Passively Own Than to Sell a Business.
Finding the right buyer can take years, and to get the best price possible you are going to need to put in some work to get your business in top shape. This includes: financial planning and organization, creating systems and controls, and learning how to take yourself out of the day-to-day business operations.
Which are the same steps you need to take to passively own a business.
Consider this: If you are willing to put in the effort to make your business look palatable to a potential buyer, you have to at least consider keeping it for the long haul. If you were able to take yourself out of the day-to-day operations, would it be more feasible to have a stream of income coming in for the next 20 to 30 years or a lump sum today?
The face of retirement is changing.
Forget Boca Raton. Imagine yourself in Europe or Asia on a perma-vacation while you passively own a company (or two). That is where the future of retirement is headed.