Most traditional financial planning is geared toward couples with children. But whether you’re single or childless by choice or circumstance, your financial plan and how you run your business — from startup through exit — may look different. Starting a business and retiring solo brings great individual responsibility, but it also offers tremendous freedom to build an intentional plan around your values, not society’s expectations.
So what does building and exiting a business solo look like when there’s no built-in backup plan, secondary income, or kids to inherit your company?
Early-Stage Business Ownership
Starting a business solo can feel both risky and freeing. You’re the deciding vote on how much to invest and which risks to take, but you may not have a secondary household income or sounding board to fall back on. So, can you take calculated risks without your personal life absorbing all the risk?
How Long Can You Fund Your Business?
Operating solo means supporting costs, like your mortgage, retirement savings, health insurance, and other personal expenses, in addition to funding your business, alone. Can your current financial plan realistically support both, and for how long? Tracking your income and expenses, trimming discretionary costs, and building an easily accessible emergency fund become more critical to help create flexibility as you get started. It may also change how you think about insurance, liquidity, and an ideal savings rate. What will it take for you to feel financially secure enough to venture out on your own?
What’s Your Definition of Enough?
We’ve been fed a default storyline that we should make big piles of money, get married, buy a home, and save as much as possible to pass on to the next generation. But what happens when that’s not part of your plan (now, or maybe ever)? Self-knowledge lasts the longest. Knowing what matters to you gives you clarity when making decisions.
Do you want an empire, or do you want to make meaningful work, autonomy, and financial independence? More than a dollar amount, is your plan supporting your values, goals, and the life you want to live?
What About Retirement?
As an early-stage business owner, it can be tempting to invest every last dollar into your business rather than retirement. However, without a spouse’s retirement fund to supplement your own, overlooking yours can have lasting consequences. Exploring retirement accounts for business owners and building retirement savings into your budget can make sense tax-wise and also ensure you’re not sacrificing your future for your business’s success today.
Scaling as a Single Business Owner
Increasing revenue and loyal customers make for a rewarding chapter as your business grows. It’s also when single business owners often have to take a step back. How much of your business’s success is reliant on you, and how will it affect your eventual exit?
Are You Building Wealth Outside of Your Business?
If most of your net worth is tied up in your business, it’s critical to create wealth outside the company. Rather than reinvesting all your earnings back into the business, work on building up account balances on your own personal balance sheet. More outside liquidity gives you greater flexibility to support your personal goals. Diversification strategies, establishing systems and guardrails, and working with a financial advisor can also provide checkpoints in place of a spouse’s or partner’s support.
What Is Your Contingency Plan?
What would happen to your business if you became incapacitated? While family businesses may default to a spouse or adult child, single business owners can be more intentional about who they assign to roles such as processing payroll, signing checks, and ensuring business continuity. Without family members in line, you can build a leadership team you actually want, rather than one driven by relationship or obligation.
Exiting a Business Solo
Eventually, you’ll plan your exit, whether to enjoy retirement, change directions, or close the doors earlier than you expected. Even if you think you want to work forever, it’s smart to always have a contingency plan. Life is long and circumstances change; understanding how you’d theoretically leave someday puts the business in a more marketable position — and saves you from having to throw together a transition plan in a time of crisis.
Who Will “Inherit” Your Business?
Without a clear front-runner, such as a child taking over the family business, single business owners must identify and build up potential leaders, find internal or external buyers, and create value that extends beyond their personal involvement. It’s critical to have formal documentation of roles and responsibilities, expectations, a succession strategy, and continuity plans.
How Much Do You Need From a Sale?
In the absence of a spouse’s pension or Social Security benefits, proceeds from a business sale will play a bigger role in funding your version of retirement. Partnering with an exit planning team, including a financial advisor, CPA, and attorney, can help you determine the amount that best supports your lifestyle, goals, and long-term security.
What’s Your Version of Retirement?
For many business owners nearing retirement, losing their sense of identity, relationships, and daily structure their company previously provided can be disorienting. In many cases, not working is not enough. Rather than focusing on what you’re leaving behind, what are you retiring to? How will you spend your days, and with whom? What will provide a sense of purpose, and how will you find community? These questions often carry more weight when there isn’t a spouse or family guiding what comes next. This is your opportunity to design what and who your next chapter will involve.
Who Will Step In?
Who will you trust to make decisions around your health and finances if you’re unable to? Consider who will take on the responsibility, who understands your values and wishes, and who can navigate hard decisions. Make sure they understand their role and responsibilities, key actions to take, and the professional partners who can help with logistics.
What Will You Leave Behind?
What do you want your legacy to be? Rather than planning for an inheritance, you may plan an endowment, support your niece through college, or give to causes you care about.
Financial Planning for Solo Business Owners
Starting, managing, and exiting a business solo means there are fewer default answers available, and there are more for you to make. Without family or a partner to help shape your decisions, you get to decide what success means to you. By understanding the special planning considerations, financial trade-offs, and what you hope your business will help achieve in your life, you can build a life you actually want, not one you think you’re supposed to have. When your business doesn’t fit the traditional path, what will you choose for yourself?
Learn more about our financial planning services and how we walk with business owners every step of the way.
