5 Steps to Retiring Wealthy Years Earlier Than Everyone Else
Retirement planners give the same advice to entrepreneurs as they do to everyone else -- divert savings into retirement accounts like an IRA or 401(k) that invest in mutual funds.
That advice is suspect for the average person, but for the entrepreneur who owns a business, it's counterproductive and completely ignores your best wealth creator.
So what should you do instead?
The surest way to manufacture wealth is to invest in what you know. And there's nothing that you know better than your business.
Your business is also where the large majority of your wealth will be created during your lifetime. So if it's to be your primary production and wealth vehicle, why not also have it be your top investment priority? Said differently, why not let your business be your retirement plan?
I'm not suggesting that you work forever. In fact, I'm suggesting the opposite. I'm suggesting you retire years earlier than everyone else, by retiring in your business -- so that you can start living the life you love today -- instead of hoping to retire some day years down the road.
However, many entrepreneurs struggle to retire in their business because they overestimate their importance to it. In truth, no one is irreplaceable in a well-structured company. So if you can't replace yourself yet, it's time for a new strategy.
Taking this forward-looking approach will increase your production and decrease your business's dependency upon you, making it easier to retire into a business that has greater potential for long-term success.
So if you're ready to get started, here are five steps to put into action as soon as possible.
1. Have a practical mission statement
Your mission statement should lead toward clarity in action and live in the hearts of your team, rather than be some wordy, forgettable statement hanging on the wall. When your team is clear about the mission, it's easier for them to take the lead when you're not physically present.
2. Build focus
Apply dvision of labor principles articulated by Adam Smith in his 1776 work, The Wealth of Nations, by creating new divisions in your business with a depth of talent and skills.
For example, when I started out, I was the customer service, fulfillment, marketer, manager and almost everything else. Now we have a marketing VP, a marketing division, a sales division, a fulfillment division, an administrative division and so on.
This allows me to focus on the highest income producing activities in the business.
3. Compensate effectively
Build a production-based economy and mindset with a compensation program that gives incentives for hitting objectives, such as more money or other bonuses (iPads, Disney trip, time off, etc.). This is much more effective than an "entitlement economy" where employees are only interested in getting paid for showing up.
And it gives employees something to work hard for even when the boss is away enjoying their retirement in the business.
4. Share your ideas
Build one-page project plans on any new idea, new position to be filled or any other action idea. This creates a framework so that the knowledge isn't just stuck in your head and allows the team to assist you in building the idea.
5. Stay updated
Create weekly pulse reports on the key stats in your business. This will allow you to quickly make course corrections and adjustments at a glance -- even if you've been out of the office all week.
In summary, instead of just being stuck as an employee in your business, build a business that relies on systems, protocol and other people's abilities rather than resting on your shoulders alone.
This approach allows you to keep the business long-term and maintain the monthly cash flow it provides while also freeing yourself from the daily management and workload.
As you adopt this new paradigm, you'll clearly see the folly in giving your money away to fund someone else's vision before you have fully funded your own.
Entrepreneur Editors' Picks
A 115-Year-Old Startup? The Leaders of This Family Business Are Honoring the Past and Building for the Future.
Turn Your Managers Into Your Biggest Asset for Winning the Great Resignation
'It Was Like a Drug': How Dave's Hot Chicken Grew a Cult Following in an East Hollywood Parking Lot
This Goldman Sachs Alum Launched an App That's Helping Young People Manage Their Finances and Healthcare (And She's Raising Millions of Dollars to Do It)
One of America's Richest Women Took Zero Outside Investors. Here's How Aviator Nation Founder Paige Mycoskie Did It.
4 Expert-Backed Strategies for Improving Your Communication Skills
This Couple Escaped Arranged Marriages in Pakistan. Now They Run a $14 Million Brooklyn Shoe Brand.