Love it or hate it, the FIRE movement (Financial Independence: Retire Early) is here to stay.

FIRE is a popular ideology in which people focus on extreme savings early in their career. Doing this enables a much earlier retirement than traditionally expected. The movement has become popular with Millennials who, at least according to the stereotype, are all tech geeks earning six-figure incomes.

Anyone can take the lessons from this movement and use them to improve their own lives, especially business owners. Saving aggressively, spending prudently, and living intentionally are all habits and ways of living that almost everyone can take advantage of. However, as a business owner or CEO, you've got a leg up. I believe this goal is particularly relevant and even more easily achievable for business owners.

Why's that? Business owners have a special advantage to achieving financial independence. Because we build the HR and benefits for our companies, we have a direct influence on how FIRE-friendly our company is for ourselves and our employees. Below are a few ways business owners can set up their business to achieve financial independence fast.

Ensure you set benefits and policies that allow you and your employees to save in retirement vehicles.

As the business owner, you control the benefits and HR policies. The FIRE movement utilizes a number of legal tax benefits that most people ignore. People on the path to financial independence will max out their 401(k), their HSA, and traditional IRAs as their preferred way to save, since this allows them to save most of their money pre-tax.  

They can then convert these funds to tax-free Roth contributions using what is called a Roth Conversion Ladder. This basically converts enough each year to make sure your taxes are minimal but that you take full advantage of your personal exemptions and you don't jump into a higher tax bracket.  

You can also set up your company's retirement programs (SEP, 401(k) or Solo 401(k)) to enable easier achievement of financial independence for you and your employees. The maximum employee contribution for 2018 is $18,500 and the maximum employer contribution limit for 2018 is $36,500, bringing the total potential tax deferred amount to $55,000.

By structuring your company's retirement program appropriately and taking advantage of all savings opportunities within them, you can save a huge amount of money tax-deferred each year, and then you can use the Mega Backdoor Roth Conversion (a technique where you initiate savings into a 401(k), then roll it over into a Roth) to convert your funds to tax free and accessible investments.

Tighten the company's purse strings and spend company money as if it were your own--carefully.

Business owners control the company's spending. A main tenet of FIRE is spending prudently. As the saying goes, "If you watch the pennies, the pounds will take care of themselves." 

This is especially true for business owners: You need to track your income and expenses, analyze it, and optimize it. Spending wisely can make your business more profitable and those profits will flow through to you.  

There is a good book on how to tighten your company's purse strings, called Profits First by Mike Michalowicz. A simple but great first start is to make sure your company is not spending money on things it doesn't need.

SaaS apps that you don't use anymore? Extra licenses for employees no longer on the team? If you can find and cancel $500 in monthly recurring wasted spend, that is $6,000 per year in additional profit for the business--and for you. So many business owners lose their focus on spending by only focusing on revenue, and they allow lots of money to be wasted.

Consider becoming the business owner rather than CEO or manager.

Perhaps you're currently the CEO or manager of your company. As the owner, you can sell your business or hire someone else to run it for you and collect the profits. What could be better than having the cash flow from your business without having to show up every day to work? As a business owner, you can make that a reality.  

You have two main options here: sell your business or set it up to run without you. Either option can help you achieve financial independence very quickly and both options are only available to business owners.

The FIRE movement could just change your life.

The goal of financial independence is not new, but it is exciting. When you run the numbers, you'll see how you can make them work to your advantage to achieve financial independence. The option to retire early is totally achievable if you plan properly.

Published on: Jan 31, 2019
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.