AARP Segment: Legacy Businesses for 55+
It’s time for our monthly AARP sponsored segment that highlights issues important to older adults in Arizona. Today we are joined by David McCarville, attorney at Fennemore Law, who discussed key issues when owning a small business and how these individuals should plan for retirement.
“The data tells us that in Arizona there are between 50 to 51 thousand small businesses that are owned by folks who are 55 and over. So this is a huge economic driver for the state. The data also tells us that those businesses generate about 22 billion dollars a year in payroll, employing about 600,000 people, so it is a massive economic impact in the state of Arizona,” McCarville said.
Not very many of these people, however, are satisfied with the way the sale of their business is going. Data explains that about 30% of the businesses will be sold, but many just close up shop, according to McCarville. Essentially, they end up being liquidated instead of sold.
“There are a lot of big challenges here. I think one mistake people make is they don’t think about the value of their business from the perspective of a buyer or a competitor,” McCarville said.
It’s also never too early to be planning for retirement and how to have financial success after selling or shutting down.
“I think as soon as you open a business you should be thinking about your exit planning, and you certainly should be thinking about contingency planning. So what would happen if you were disabled or you did pass away in an untimely manner? You know, these issues are all part of one issue, which is succession planning and transferring the wealth from your business to the loved ones that you’re supporting and that you want to continue to support,” McCarville said.