7 Investment Strategies for Business Owners [Guide]

After years of early mornings, late nights, and solving problems no one else saw coming, you’ve built a business you’re proud of. As you near retirement, or if you have already retired, you may be wondering what’s next.

How can you protect what you’ve built? Ease into retirement? Keep earning without working as hard? The right business investment strategy can help you get where you want to go. Business investment is a way to keep your business working for you even when you are no longer in the driver’s seat.

In this guide, we’ll walk you through what a business investment is, questions to ask yourself before investing, and seven strategies that can maximize your growth potential to support your next chapter.

What is a Business Investment? Depends Who You Ask

What exactly is considered a business investment depends on how you define the term.

In economic terms, the Congressional Research Service defines a business investment as “spending by private businesses and nonprofits on physical capital—long-lasting assets used to produce goods and services.” They go on to define physical capital as equipment, structures, and intellectual property.

Economists use this definition in the context of things like GDP or national growth. But for most small business owners, especially those thinking about retirement, business investment refers to broader investment options.

In practical terms, and the definition considered for this guide, a business investment is any way you put money, time, or resources into a business with the hope of getting something valuable back. That return might be more income, more freedom, or a smoother transition into retirement.

Implementing the right investment strategies for businesses can help you:

Keep your business stable and strong;
Pass it on to someone you trust;
Earn income without being hands-on every day.

Questions to Ask Yourself Before Investing

Before jumping into business investment strategies and investment opportunities, start by asking yourself a few honest questions:

What kind of life do I want for retirement, and how does my business tie into that?
Am I investing for economic growth, for safety, or to leave a legacy?
How much risk feels comfortable to me right now?
Will this investment help me and the people I care about in the future?

Imagine yourself a few years down the road. What does success look like? Maybe it’s checking in with your team once a week while enjoying more time with family. Maybe it’s seeing your son or daughter take over the business and thrive. Maybe it’s selling the business entirely or investing in another business idea.

The clearer your investment objectives are, the easier it becomes to pick business investment strategies that align with them.

7 Smart Investment Strategies for Business Owners

Starting and growing your business was the hard part. Now, as we talk about business investments, it’s time to think about how to make your business work for you in a new way. These seven strategies are designed to help small business owners like yourself find stability, flexibility, and long-term value.

1. Reinvest in Your Business

This relates to the economic definition of business investment, in other words, reinvesting back into your business to help make it more productive. Since you already know your business inside and out, it should be relatively easy for you to identify what’s working and what needs to improve.

Consider investments like:

Upgrading software that slows you down;
Offering employee training to loyal employees with leadership potential;
Putting more into marketing to drive more sales.

Since you’re building on a strong foundation, this is a low-risk investment.

2. Maximize Tax-Advantaged Retirement Plans

As a business owner, you can contribute significantly more to your retirement than W-2 employees, through SEP IRAs, Solo 401(k)s, and Defined Benefit/Cash Balance Plans.

For example, for traditional and Roth IRAs, you can’t contribute more than $7000 ($8000 if you’re 50 years old or older) per year. Meanwhile, the contribution limit for SEP IRAs was 25% of your compensation or $69,000 in 2024.

These plans serve two purposes: they help you build retirement wealth, and they lower your taxable income now.

3. Use Profit Allocation Systems (e.g., Profit First)

Many business owners reinvest everything back into their business and forget to pay themselves consistently. Strategic profit allocation ensures this doesn’t happen.

Models like the Profit First approach help you structure your company’s finances so you’re setting aside specific percentages of revenue for your own compensation, taxes, profit, and expenses.

By separating out personal compensation and reinvestment funds, you can begin investing personally and building wealth outside of your business, too. This helps make sure you’re getting paid fairly for the hard work you dedicate to your business.

4. Leverage Insurance as an Investment and Protection Tool

Insurance is something you pay for with the hope you’ll never need to use it, but it can also be part of a smart, long-term investment strategy.

Cash value life insurance can play a role in a tax-advantaged growth strategy. They can grow tax-deferred, be borrowed against, and provide a tax-free death benefit.

They can also protect your business with tools like:

Key-person insurance, which provides financial support to a company if the owner or a key executive passes away.
A buy-sell funding agreement, which ensures the smooth transfer of ownership if one partner exits.

5. Invest In Other Businesses

You’ve built a wealth of knowledge through years of running your own business. That insight is valuable, and you don’t have to let it go to waste just because you’re stepping back.

Not every investment needs to stay tied to your current business. There are plenty of ways to use your time, capital, and experience to support others without getting pulled back into a full-time role.

You might consider buying into a franchise with a management team already in place. Many franchises offer proven systems and predictable returns, which can make them appealing for investors who want structure without hands-on work.

Another option is to partner with younger entrepreneurs who have energy and ideas but need support, funding, or mentorship. Your guidance could help them avoid missteps while giving you a stake in their success.

You could also serve as a paid advisor or board member for a growing company. These roles let you stay connected to the business world and earn income without the daily stress of operations.

What these options have in common is lower involvement and lower risk. You’re choosing paths that allow you to contribute your skills, earn returns, and keep your schedule flexible

6. Invest With a Tax Strategy

Regardless of the investment strategy you choose, every investment decision should factor in tax reduction strategies. After all, it’s not just about what you make, but also about what you keep. Since California has some of the highest state taxes in the country, a little planning can go a long way in helping keep more of your retirement money intact.

A few key tactics to explore include:

Section 199A deductions for qualified business income;
Optimizing your business entity to reduce tax liabilities (e.g., S-corp vs. LLC);
Charitable giving strategies, like donor-advised funds, which allow you to support causes you care about while reducing your tax burden.

These strategies help you keep more of what you earn, and use it in a way that reflects your goals.

7. Plan for the Future with Succession and Exit Strategies

If you’ve spent substantial time building your business, it’s likely one of your largest assets. As such, you shouldn’t wait until you’re ready to leave it to start thinking about what happens next.

Here are some common paths to consider:

Internal Family Transitions
Passing your business to a family member can help keep your legacy alive, but it takes careful planning. So start early and create a timeline. Get your successor involved in the business. They should be comfortable taking a leadership position, making daily decisions, and be familiar with the company’s finances. The more prepared they are, the smoother the transition will be.

Employee Stock Ownership Plans (ESOPs)
An ESOP lets your team gradually become owners of your business. It’s a built-in succession plan that rewards their loyalty. It also offers tax advantages and helps retain key employees who are now personally invested in the company’s future.

Selling Your Business and Investing the Proceeds
If you decide to sell your business when you’re ready to move on, what you do after selling matters just as much as the sale itself. Look to create a plan for ongoing income, giving, or your legacy. Smart post-sale investing helps you turn one big payout into long-term peace of mind.

Work With a CERTIFIED FINANCIAL PLANNER™

Whether it’s reinvesting in your business or preparing for your exit, there are several ways you can invest wisely as a business owner. What’s most important is that you look for investment opportunities that match your goals and lifestyle. Consider working with a CERTIFIED FINANCIAL PLANNER™ who can help you navigate investment strategies and the road to retirement.

At Chatterton & Associates, we can help you prepare for the next phase of your life confidently and clearly. We offer financial planning services tailored to your business’ needs and long-term goals.

If you’re exploring investment strategies for businesses, looking for new investment opportunities, or just want a second opinion, reach out today.