As founder of Going GreenHouse, a cleaning service that uses natural products, April Prothero, 32, faces a challenge common to entrepreneurs.
She has to invest in expanding her Chandler, Ariz.-based company, which has 12 full- and part-time workers, and reserve some cash for emergencies. At the same time, she must save for retirement. Prothero, who is single with no dependents, put $2,000 toward that goal last year, but her aim this year is to sock away about $15,000 in a Simple IRA.
"I think it will be exciting to feel confident that I'll be able to retire when I want to," said Prothero, who expects Going Greenhouse to generate about $150,000 in revenue this year.
Prothero has been working with Shanna Tingom, a financial advisor for Edward Jones based in Gilbert, Ariz.
Tingom, who specializes in advising entrepreneurs, said many have trouble committing to saving regularly for retirement because they have an unsteady income or need to invest in their business. And because they are not part of corporate 401(k) programs, which make contributions to a retirement savings plan automatic, they tend to put it off.
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"When you own a small business, everything kind of comes before saving for retirement," Tingom said. "They may think about it, open an account—but they don't set up a plan and really contribute to it."
Others don't save because they're in denial.
"There's a misconception with a lot of small business owners that 'my business is my retirement—I will grow the business, sell it and retire,' " Tingom said. Unfortunately, they don't always realize that the market may not be hospitable at the time they want to sell their firm, or their business isn't worth what they expected. In some cases, it's not salable at all."