In the past six months, I’ve had the honor of helping a few of my older customers retire. Some of these friends have been clients for the past three decades. Each of their stories is radically different, but there are several similarities that should be discussed.
We all know the basics when it comes to entrepreneuring. We know that 90% of all businesses don’t make it past 12 months.
That number has become part of the American Lexicon. It’s common knowledge that most entrepreneurs go through at least one bankruptcy, maybe two or three. The path to success is normally a rather bumpy ride.
But that 90% number tells us so little. The real question becomes, what happens if you’re part of the 10%? What percentage of entrepreneurs actually attain their dreams, and what does that success look like?
The truth is that few have any true modicum of success in the first place. Many, given their income, might be much better off shutting down and getting a job.
But what percentage of entrepreneurs make it to their 20th year in business? These numbers get a little murky given the fact that many will open and close, and open and close again going through many different companies before they actually succeed.
The best number we have is about 2%. Only 2 out of a hundred make it to their 21st year of entrepreneuring.
Further statistics tell us that to become a one percenter, your income must be in excess of $652,657 currently. Also there are only a little over $263k Americans who earned over $1M last year. That’s about eight tenths of one percent of all taxpayers.
So let’s say that you’ve beaten the odds. You’re a successful entrepreneur who’s been in business more than 20 years earning over $1M annually. You save your money, get older, and decide that it’s time to hang it up.
The question becomes how?
You have three choices. You can close up shop, sell the place, or give it to one of your kids or close relatives. If you weren’t depressed quite yet, the following numbers will probably push you over the edge.
Only 30 percent of wealthy families are able to translate that wealth to the second generation. And getting that wealth to the 3rd generation puts the number down to 10%.
We’ve all seen second generation businesses that went straight into the gutter. Whether it’s abject stupidity, complete sloth, or a bad case of spoiled laziness in a child, it happens more times than not.
I’ve already told my progeny on too many occasions, that if she can’t do it better than me, she isn’t going to get any of my businesses. My employees and clients deserve at least that.
Growing old and watching the business you put your life into run straight into the ground because you were foolish enough to give it to an undeserving relative, is no way to retire. If you want a pet, buy a dog.
So the percentage of people who earn more than $1M annually is eight tenths of one percent. Being able to translate that wealth to the next generation is only 30 percent of that number or as little as two or three tenths of one percent. The chances of getting your money to your grandkids is even more minuscule.
I told you that the numbers were depressing.
Let me leave you with this.
But wait. It gets worse.
Let’s say that you made it through all of those steps. You’re now a retired entrepreneur. You’ve saved over $5M for your retirement, which puts you into the one percenter club of retirees, and after working most of your life to create a successful business, you found a reasonable way to get out.
One of the saddest things I’ve seen in my career is entrepreneurs who die within a year of retirement. I haven’t just seen it once or twice. The number now ends in “teen”.
If you’re special enough, gifted enough, and talented enough to beat all of those odds, hanging it up and not doing anything else with your life may actually lead to an early demise.
Being able to manage men, money, material, machinery, and marketing is no small feat in the first place. But doing it successfully for let’s say forty years, and then trying to spend your life playing Parchessi and watching Oprah probably won’t lead to a long and happy retirement.
Most of us need to keep our minds busy. Many of us identify with the job. You can’t just turn it off one day and expect to not go nuts.
Anyone who can actually do this is not ordinary or normal by any standard. Thinking that your retirement will look like others is by definition, ridiculous.
I’m writing this because most entrepreneurs spend their days thinking about the here and now. Spend some serious time thinking about the future. Working forty years for a one year retirement so your kids can then blow all of your money is no way to go.
We’re all going to get through this. Let’s get through it together.
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