Entrepreneurs have an unbridled capacity to take risk and to persevere despite past failures. These individuals are often so passionate and knowledgeable about their business that they are able to operate unfazed under uncertain conditions that others would not be able to stomach, with the sole purpose of accomplishing their goals.

If you’re an entrepreneur approaching retirement, you may occasionally look back on your path and reminisce about your business adventures. While being your own boss could have been very rewarding, many times the journey was downright tough – no steady paycheque, no retirement savings plan with employer contributions, and no guarantee that your venture would succeed. Now, after many years of hard work, balancing family obligations, taking care of employees and customers, and basically putting everything you had into your business, it is time to evaluate your retirement plan. Here are a couple of points to consider:

Now is the time for diversification:

Given your level of knowledge within your industry, it is natural to feel more comfortable investing in entities closely related to your business. To a certain extent that makes sense, if you are sticking with your circle of competence, as Warren Buffett would say. However, your financial portfolio needs a certain level of diversification; hence, it is a good idea to construct a portfolio consisting of quality companies that derive revenues and profits in industries entirely different from that in which your business operates. For example, if your business derives a significant amount of revenue from the home building sector, a prudent strategy would be to invest a larger proportion of your portfolio in other sectors with little housing-related activity. It’s important to select additions to your financial portfolio based on their own merit of quality and long-term performance expectation, as opposed to purely an exercise in diversification.

Have a reasonable exit plan in place:

Your business is an integral part of your life given the amount of time and effort you put into making it successful, so it is not easy to think about the day when you will have to retire. Nonetheless, having a well-thought exit plan in place far in advance of that day will bring comfort and ease to the process of transitioning out of your business. Ideally you should begin implementing this plan at least 5 to 10 years prior to your retirement date. Having proper counsel will help you to determine how much you expect to get from selling your business or a portion thereof, what your income source will be once you leave the business, and how you can build a long-term investment portfolio to meet your retirement income needs.

These are important considerations for business owners that should be explored, with the help of an investment professional, well before retirement.