By Michael Ryan

If you're a small business owner, you may think of the business itself as your most important tool for building wealth. And to some degree that's probably true-you put a significant amount of money into the business to help it grow, and when you're ready to retire you may be able to sell the business and get your investment back, along with any appreciation in value. But while it may seem like you have it made, don't be fooled into thinking you can rely on just this one source for your retirement nest egg. You need to consider building wealth outside of your business as well.

There are certainly rewards that come with owning a business, but it also comes with plenty of risks. Sometimes circumstances beyond your control can have detrimental effects on the value of your business. Additionally, your business could change dramatically between now and the time you retire. As a result, it's important to have a backup plan in the event things don't work out quite as you had hoped.

Balance Short-Term and Long-Term Needs
No matter how hard you try to avoid it, sometimes it seems like your day-to-day business expenses just eat away at your entire paycheck. Before you know it, the money in your paycheck seems to vanish, and you don't even know where it went. And while you're focused on just making ends meet, putting money away for the future may be the last thing on your mind. Even so, you need to remember that taking care of your longer-term financial goals is just as important as meeting your current needs.

Pay yourself first by investing a percentage of your income into a retirement plan. Think of it as paying a bill, but instead you are paying yourself for later down the road when you will need the money the most.

One of the first places business owners should start is with a good retirement plan. If you're not already doing so, consider contributing to a traditional or Roth IRA to get the benefits of tax-deferred or tax-free growth on your retirement savings. If your business doesn't have a qualified retirement plan, and as long as your spouse is not covered by a qualified plan through his/her employer either, you can take a deduction on your income taxes of up to $4,000 ($5,000 if you're 50 or older) in traditional IRA contributions. If your business has a retirement plan, your contributions may or may not be deductible, depending on your income (Roth IRA contributions are never deductible).

Company Retirement Plan Options
While an IRA fund is a good start to retirement savings, a qualified plan for your business will let you save much more. There are a wide variety of available plan options, and some can be established with minimal expense. Plan types include: Simple IRAs, SEP IRAs, 401(k) plans, owner-only 401(k) plans, 403(b) plans (for tax-exempt 501(c)(3) organizations) and defined benefit (traditional pension) plans. The best plan for your business will depend on several factors, including the objectives you want to achieve.

Ever since the days of putting pennies in a piggybank, you've likely received plenty of advice on the value of saving your money. As a reminder of just how important it is to put part of your income aside-and to do it sooner, rather than later—take a look at an example of just how the numbers shake out.

For this example, we'll use two business owners-one who starts early and lets her savings grow, and another who waits until later to begin.

Let's say the early business owner begins saving today by putting away $5,000 per year for five years, and then allows that investment to grow for 15 years without putting in another penny. The late business owner, on the other hand, waits for 10 years before he even begins his savings plan. He then invests $5,000 a year for 10 years, putting his total investment at $50,000-exactly twice as much as the early investor.

Assuming an 8 percent average annual rate of return on their investments, if we jump ahead 20 years from today, the difference in their accounts will be substantial. Our early business owner will have grown her initial contributions of $25,000 to approximately $100,493. Keep in mind she hasn't put a penny of her own money in for the last 15 years.

Meanwhile, the late business owner's account has grown to only $78,227, although he has been contributing each year for the past ten years¾for total initial contributions of $50,000. That means our early business owner put in only half as much of her own money, and came out well over $20,000 ahead.

Now, this example is only meant to illustrate the advantages of saving regularly and starting early. This does not reflect the performance of any specific investment, nor does it take into account the eventual effects of taxes. It does, however, make the point very clear-by delaying 10 years in getting started, the late business owner loses out on the benefits of compounding over a longer period of time.

Discipline Required
Disciplined investment habits aren't always easy to come by, but there are several things you can do to improve your savings routine. One of the easiest ways to establish a savings plan is by taking advantage of the convenience of electronic funds transfer (EFT). You may be familiar with this type of service if you currently receive or make electronic deposits to your bank account. This service is also available from other financial services firms, and paying yourself first by using an EFT system can help you get in the habit of saving.

Direct deposit allows you the opportunity to deposit all or part of your paycheck to the account of your choice, so you could choose to set aside a certain portion to go directly to a savings account as opposed to your checking account.

Another way to take advantage of EFT is to set up an automatic monthly deposit. This is a simple, disciplined way to add to your account, authorizing a specific amount to be transferred from one of your accounts to another (e.g., from checking to a savings or investment account).

Regardless of which method you choose-or even if you decide on a completely different investment strategy-putting aside money now will help you reach your financial goals that lie further down the road.

One thing to keep in mind is that even if you contribute the maximum to an IRA or retirement plan each year, it may not be enough by itself to provide you with a financially secure retirement. To help you in your goal of preparing for retirement, you should probably have other savings as well. Once you've sized up your retirement savings options, you may choose to invest in an IRA, a qualified plan, a taxable account or maybe some combination of the above.

Be aware that the returns on your marketable investments may be less than what you're used to earning in your business, but that may actually work to your advantage. These investments may come with less risk and greater liquidity. They also provide diversification, which is one of the keys to any successful investment strategy.

Your business is definitely one of your most important assets, but it doesn't have to be your one and only. Plan ahead and invest in your retirement as a whole, using a combination of other assets to complement your investment in your business.

Michael K. Ryan is a financial consultant and investment broker at A.G. Edwards. You can reach him at (816) 781-0800 or .