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Wash Wisdom: Retirement planning for small business owners

In this edition of Wash Wisdom, we cover tips for retirement planning and getting business exposure.


In this edition of Wash Wisdom, we cover tips for retirement planning and generating media buzz.

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5 retirement planning tips

According to the article “5 retirement planning tips for small-business owners” by contributor Kerry Hannon on, the retirement plan for many small-business owners often comprises of either planning to pass on the business to a family member, but having a stake in the future wealth, or planning to sell the business and using that money for retirement. However, Hannon says, these all-in-one approaches are a dangerous venture for a variety of reasons. The reasons are often unexpected but can include business failure and early retirement, possibly due to health reasons.

The reason, Hannon says, that many entrepreneurs fail to set aside money for retirement is that they tend to reinvest all the money generated back into the growth of the business. It is understandable, he says, since taking money away can impede business growth and make it more difficult to maintain, but it is still dangerous nonetheless. As such, Hannon offers five tips on retirement planning for small-business owners:

  • Calculate your expenses. Figure out how much you will need to cover living expenses during your retirement, especially when the business won’t be covering some of the costs. Seeing these numbers might help you understand just how critical retirement planning can be. Major financial service providers, such as Fidelity, T. Rowe Price, TIAA and Vanguard offer free online retirement worksheets and calculators.
  • Consider hiring a financial advisor. A financial advisor can help you get your retirement plan started and help you focus on it. Hannon recommends finding an advisor with a Certified Financial Planner (CFP) designation.
  • Start a retirement plan. While you don’t have to invest a huge amount of money in it at first, setting aside funds now will help lower your tax bill and make the funds grow pre-tax before you begin withdrawing it. Opening a plan is usually fairly inexpensive, and there are four main options:
    • SEP IRA. This is a tax-deductible retirement plan like a traditional IRA and a great option for businesses where you are the only employee. For 2016 returns, you can contribute up to 25 percent of your pay or up to $53,000. However, note that if you have employees, you will have to fund SEP-IRAs for each of them.
    • Simple IRA. This retirement plan is for businesses with 100 or fewer employees and lets your employees contribute pre-tax income like in a 401(k). For 2016, the maximum contribution is $12,500 or $15,500 for those 50 and older.
    • Solo 401(k). This retirement option is for those who are self-employed without employees (barring, perhaps, a spouse) and lets you act as both an employer and employee. As an employer, it lets you contribute up to 25 percent of your pre-tax pay; in addition, as an employee’s you can contribute up to $18,000 (or $24,000 for those over 50). Your total contribution cannot exceed $53,000. For those working with a spouse, he or she can also contribute the same amounts.
    • Simple 401(k). This option is for businesses with 100 or fewer employees. For 2016, you and your employees can contribute up to $12,500 ($15,500 if over 50) as well as borrow against the money in the accounts and make withdrawals in times of financial hardship without penalty.
  • Invest in diverse index funds. Investing in index funds is both simple and a conservative form of investment. Be sure to go global in your investments; for instance, you might invest in a low-cost index fund (ETF) that invests in the entire U.S. stock market, another one in foreign stock markets and yet another one in the U.S. bond market. “Simpler still,” Hannon says, “invest in a target-date fund that automatically adjusts the balance of your fixed-income (bond) investments and stocks based on your age. Select your target-date fund based on the year you expect to retire.”
  • Look at 401(k) plans for small businesses. According to Capital One’s research, 60 percent of small businesses think that they do not have enough employees to offer a 401(k) plan, Hannon says, but some 401(k) providers are in fact actively targeting small businesses. For instance, Capital One offers Spark 401k, which provides low-cost, all-ETF 401(k) plans for businesses with fewer than 100 employees.

Read the full article on retirement planning for small-business owners here.


4 tips for getting exposure for your business

In the article “4 Tips on Generating Buzz for your Business, According to a PR Expert for Startups” on the Entrepreneur website, contributor Sina Chehrazi provides four tips from Sami McCabe, CEO of the London-based PR firm Clarity PR, on how to keep people interested and talking about your business:

  • Tell about your culture. According to McCabe, expressing the company’s culture is often the top priority for Clarity’s clients because recruiting the best talent is key. Retaining your top employees will help you face the challenges of growing your business, so make sure to share the developmental opportunities employees have.
  • Explain the problem you are trying to solve. The news is naturally drawn to the negative, so put a spin on your story by highlighting the problem first and then explaining how your company solves it.

Related: Starting a carwash: Tips for dealing with media

  • Be prepared to offer opinions. Journalists (and their audiences) can often be bored by technical talk or non-committal commentary, so be prepared to offer insight and opinions on a range of issues, sometimes contentious. Remember, if you bore the media, it won’t come back for more commentary.
  • Get customers to provide testimonials. It’s one thing for you to tell the story of your company and its successes; it’s another to hear from customers about how great your company is. Consider asking your customers to participate in any form of PR, and consider creative ways to thank them, such as promoting their businesses or upgrading their services.

Find the original article here.

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