Today, more women are getting college degrees than men, and women now make up half of the U.S. college-educated workforce.1 On top of that, the number of women in executive-level positions has grown from 17% in 2015 to 21% in 2019, while the number of women running Fortune 500 companies is at a record high. Those are some great reasons to celebrate! But when it comes to saving for retirement? Well, that’s a different story (especially for midwives).
A recent study found that only 12% of women are very confident they’ll be able to retire comfortably. Meanwhile, more than half of women (55%) expect to retire after age 65 or don’t plan on retiring at all. That’s not okay! Listen: This is your money and your financial future. It’s time to take charge and start taking some steps that’ll help you move closer to your retirement dreams. You can do this!
When you’re playing the starring role in your own midwifery practice, it can be hard to imagine how the show will go on without you. But aging small-business owners have a lot of good reasons to start planning today for a graceful exit. Being able to have your midwifery brand have a legacy to serve communities for generations to come. Create your own pension plan of a nice steady retirement income from selling the building, business, and supplies with loan repayment terms. That means considering what it might take to sell your business and what price you need to get to fund a secure retirement. Too many times I hear midwives want to sell their practice and the decision was made with less then six months notice.
If you’re like many older entrepreneurs, you may be behind in readying your business for sale. Although 53% of baby-boomer owners intend to exit their businesses in the next decade, nearly 90% of them don’t have a written plan to achieve that goal, according to a 2008 survey by White Horse Advisors, a financial advisory firm in Atlanta. Given that many of these business owners have most of their net worth tied up in their firms, the lack of a formal exit plan “creates a pretty dire outlook for retirement for entrepreneurs,” says Richard Jackim, managing director at New York City–based mergers and acquisitions firm MidCap Advisors.
There are several reasons to plan for the sale of your midwifery business well before your desired retirement date. It can take anywhere from several months to several years to complete a sale, and many buyers will want the seller to stick around for a year or more to smooth the transition. “You don’t just hit a certain age and say, ‘Now I’m going to sell,’ ” says Tom Deans, who in recent years helped sell a plastics manufacturing business founded by his father and is now a Toronto-based public speaker on business-succession planning.
My goal is to help midwives all over the country create strong foundational business and personal foundations for their goals and dreams to become a reality. Part of this mission includes talking just as much about start up planning as exit strategies. What if you can’t work due to disability? What if you pass away, how will the business and partners involved transition? If someone wants to leave the practice for retirement or moving away, how is that process handled? Those are all great questions that the business operating agreement would address.
There are specific ways to value the business including client volumes, service area, revenue streams, building, supplies, staff, and brand created in the community. That is the easier part of the process. The harder part is planning ahead (typically years) when to sell the practice and at least stay on until retirement as an employee versus owner anymore. It is a hard transition for midwives to think about and do. I have heard too many times over the years about midwives losing all the equity invested into the business as a retirement income stream due to ill preparation for that portion of their financial plan. Our businesses are so unique that the buyer market isn’t the general public but other midwives considering starting their own practice and would prefer a “well oiled machine” to take over on.
I want more midwifery legacies present. I want more midwives to retire comfortably on the business loan payments from their valuable business. And I want newer midwives to have business mentors so the practices will be sustainable long term. If you are considering selling your practice or even considering retiring in next five years, don’t hesitate to reach out to me so we can start making your exit strategy for the practice today!
Leslie Cornwell, CNM