When you own a small business, you are taking your retirement planning into your own hands. Retirement planing as a business owner is very different from that of an employee, and many owners are caught off guard. Not only is the process more complicated, with fewer safety nets, but you will also need to establish a well thought out business succession plan that details how you will sell your business or pass it on to a new generation of family members.

So, how can you successfully juggle these two big goals simultaneously? The very first step is to get in touch with the real challenges that you may be facing. Many small business owners don’t have enough retirement savings. On the other hand, not every small business will find a buyer. A study by the Exit Planning Institute found that while some 4.5 million firms could be up for sale in the next decade because their owners are reaching retirement age, only 20 percent to 30 percent of these businesses will end up selling.

Once you have a realistic understanding of the challenges, you can begin to plan for both retirement savings and your business’ succession.

Tips to Plan for Retirement as a Small Business Owner

When it comes to your retirement planning, here are a few points to consider:

Figure out how much you need for retirement. This step requires you to think about where and how you will live once you are no longer running your business. Some people will eagerly move from a high-cost location to someplace that’s easier on the wallet, but not every retiree wants to do that. If your succession plan (see step 3) calls for you to stay on as a consultant to your business after you sell or transition, you may not be able to. There are free retirement living cost calculators on just about every personal finance website, as well as on the websites of retirement savings companies like Fidelity, Rowe Price, TIAA and Vanguard. Pick one, and run your numbers.

Commit yourself to start saving for retirement right away. This is regardless of your age and regardless of how much you can afford to sock away. One way to ensure that money is going into your retirement account, is to set up automatic deductions.

Research your options. If you own a small business or are self-employed in one, then there are actually several retirement account options to choose from. The most common small business retirement plans include:

The IRS has up-to-date information on all of these plans; just follow the links provided.

At the end of the day, you need to pick the plan that’s best for you and your business with an eye towards where the business is now and where you hope to take it in the future. Many of the above accounts can be professionally managed. Here it pays to do a little shopping around since financial management can vary significantly in terms of service and administration costs among providers.

Write a succession plan. Finally, you need to have a solid plan in place for the transition of your business to another party once you retire. Your small business can actually turn out to be one of your largest assets- but only if you divest yourself from it in the right way. A survey conducted by CNBC in 2015, found that 78% of small business owners intended to sell their businesses to fund their retirement, yet less 30% of these owners had a succession plan in place. Of course, every situation is unique, so you will need to speak to a qualified professional to hash out the details of your succession plan. But, here are a few points to consider:

  • If your plan includes turning the business over to your children and they are not buying the business outright, you’ll need to think about how you will draw your equity out during retirement.
  • If plan on selling the business to one of your business partners or one of your other employees for leadership, you have to decide if you want to still retain ownership while allowing this person to run the business.
  • If you plan on selling the business outright, then you need to have a realistic sense of the true value of the business as well as how the sale may be structured. For example, if the business is worth a significant amount of money, you may agree to a lease to own or other financing arrangement. This means, however, that you will not get the full amount right away.

Bottom line: retirement planning as a small business owner may take a bit of work to figure out and set up. But, you’ll generally be rewarded with a lot of flexibility and control over how you plan for your golden years.