Many invest blood, sweat and tears into building their business but never set cash aside for the future. Image Credit: Pexels

Retirement can loom like a dark cloud for small-business owners. Many invest blood, sweat and tears into building their business but never set cash aside for the future.

A significant number of entrepreneurs worldwide have reported putting aside no retirement savings at all. For some, selling the business is their only retirement plan.

That's a risky bet, said Keith Hall, president and chief executive officer of the NASE, the largest association of entrepreneurs and micro-businesses in the US.

"You're putting all of your eggs in one basket. Not just your current lifestyle, but your future," Hall said. "If something goes wrong, you sacrifice both."

And the list of things that could go wrong is long: Your business could fail. Your health could fail. You may not find a buyer. You may have to sell for less than you need. You may not be able to retire fully.

Rather than gamble on everything going right, diversify your nest egg so it will last you well into your later years.

Make retirement planning a priority

Saving for retirement is often the last item on your budget and the first to get cut in favor of other priorities, Hall added. Instead, make it as important as paying your mortgage or running your business.

This won't come naturally to most entrepreneurs, who are often hyper-focused on immediate needs and tend to plan in three- to five-year increments.

"It's hard as an entrepreneur and small-business owner to think 20-plus years out," said Mary Bell Carlson , owner of Carlson Consulting LLC, a US-based bookkeeping, payroll and consulting service, specialising in helping small businesses. "I'm often figuring out what I need to do today for immediate cash and long-term profitability."

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If you are a business owner, saving for retirement is often the last item on your budget and the first to get cut in favor of other priorities.

But Carlson, a financial counselor and certified financial planner, makes a point to invest where she can. She and her husband contribute to his personal retirement plan. They each also put money into individual retirement accounts, among other investments.

"My biggest lesson has been to start, no matter how small the amount, it's just important to start," she said.

Determine what you can afford, whether that's 1 per cent, 5 per cent or 10 per cent of your earnings, and commit to it, Hall says. Over a long enough window, even small, regular contributions will compound into something meaningful.

Get input from a professional 

Sure, you can try to decode which retirement plan is best for your business. Or you can work with a certified financial planner or registered investment advisor to determine the best path. Doing the latter can give you confidence in your strategy, help you avoid any costly penalties and ensure you don't leave any money on the table.

If selling is still part of your retirement plan, the help of a professional is essential, said Norm Sherman, a US-based certified mentor with SCORE, an organisation that offers free business mentorship. First, you need to know whether your business is sellable and what you can realistically expect to net in a sale.

An investment banker or business broker can evaluate your revenue, profit margins, business structure and market to give you an honest assessment and help you better position your business for a future sale.

"It costs you nothing to get answers to these questions," Sherman says. "Don't operate blindly, find experts who can help you."