For small business owners, offering a retirement plan is entirely optional. In fact, most small business owners don't offer retirement plans or retirement planning to their employees. But there are many advantages to offering a retirement plan, and established small businesses will find it fairly easy to start.

1. It Doesn't Cost As Much As You Think

Actually starting a retirement plan is fairly minimal as far as fees go. For most small businesses, the cost is almost entirely negligible. Retirement plans become expensive when you offer employer matching, i.e., you start adding to the amount of your team's retirement accounts on your own. But that's not required. Many employers offer retirement plans but don't match. Others match a low percentage.

2. It Can Improve Quality of Work

The number-one worry many employees have is their financial situation. Worried employees are ineffective employees. Their minds are on other things. By giving retirement plans to your employees, you can improve their own financial stability and consequently get better work out of them. This can be in addition to general financial planning that can be provided by the investment company that you use.

3. It Will Benefit You

Small business owners can also benefit from retirement plans by investing in the company retirement plan. Many small business owners instead choose to invest everything they can in their business, but though this can improve growth, it doesn't do much for personal financial stability. Having a retirement plan offers some protections for a small business owner: a retirement account isn't going to be touched to pay business debts.

4. It Leads to Better Employee Retention

One of the most difficult things for a small business owner to experience is the loss of a good employee. Because small businesses only have a few employees, going through the hiring and training process can be expensive and time-consuming. Having retirement plans leads to better employee retention, as employees want to keep contributing to their retirement accounts. If you do offer matching, you can also delay vesting. The vesting period is the period in which the employee actually owns the money; employees often need to stay some period of time to own all the money in their account.

Ultimately, a retirement plan will benefit both the business owner and their employees in a way that far exceeds the initial startup cost. A financial planner or retirement planning expert can give an overview of any additional benefits.