HERE'S HOW MANY small-business owners plan to fund their golden years: by selling the business they've built for a pile of cash.

For soon-to-retire entrepreneurs, however, a probable recession could put a damper on those plans. "The No. 1 question we're getting asked right now is: 'Is this a good time to sell?'" says Robert Koenig, president of Woodbridge Group, a New Haven, Conn., a mergers-and-acquisition firm that often helps baby-boomer clients bring their companies to market. "They are worried that it's not a good time, that the economy is affecting buyers' thinking."

Indeed, a weak economy can dramatically affect your company's bottom line and its ability to attract a buyer. That's why financial-planning experts say it's critical to also fund tax-favored retirement plans — such as 401(k), simplified employee pensions (SEPs) or SIMPLE-IRA plans — throughout your career in anticipation for the next stage of your life.

But for retirement-age business owners who haven't adequately prepared, it's not too late to bulk up your retirement savings and tailor your company or acquisition during an economic downturn. Here's how.

Play Catch-Up

If you haven't been socking money away, it's time to consider a defined-benefit retirement plan — essentially your own pension plan. These plans work well for high-income people in their 50s who have less than they should in retirement savings and want to contribute more than defined-contribution plans (such as 401(k)s) allow. Big contributions are essential for those who don't have a lot of time for the account to grow, says Michael Kresh, a certified financial planner in Islandia, N.Y., and author of "You Can Afford To Retire."

Contributions are also tax-deductible; click here for more information.

Setting up a defined-benefit retirement plan can be expensive, since it requires an actuary to determine your contribution limit. And it's best for business owners who are at least five years away from retirement to allow more time to save, Kresh says.

Having a plan in place will help when it comes time to sell the business. "It will give you more flexibility when it comes time to structure the sale," Kresh says. Unlike a business owner with no retirement savings, a business owner with the security of a defined-benefit plan is in a better position to negotiate the best price or terms, he says.

Get Professional Help

When the business is your sole nest egg, its sale price will determine the amount of money you'll have available in retirement. If a slowdown in the economy forces you to take a lower sum for the company you've built, you need to make sure that amount will adequately fund your lifestyle for the remainder of your life. It's a good idea to consult with a financial advisor or planner about how much you'll need and, ultimately, how to best invest the proceeds of a sale.

When it comes to putting your business on the market, it's also wise to enlist the services of a professional business broker or mergers-and-acquisition specialist. "Business owners generally sell their businesses one time," says Jeff Harris, author of "Retire Rich & Happy" and a financial consultant with Raymond James in York, S.C. "But the people who are buying the business do this as professionals." Some private-equity players "are looking to find business owners who aren't as aware of the value as they could be," he says. "It's important that the business owner engage the know-how and the expertise to help them." Businesses that post less than $1 million in annual revenues typically turn to a business broker; multimillion-dollar businesses often use the services of a merger-and-acquisition specialist. Ask your lawyer, banker, accountant or other business owners for a referral; sites such as BizBuySell.com provide information on the process.

Prep Your Business

What makes a business attractive to a potential buyer? Quite simply, profits. Especially as the economy cools, "be aware of doing everything to maximize revenues and minimize operating expenses," advises Barry Evans, owner of Acquisition Services Group, a La Jolla, Calif., mergers-and-acquisition firm. "If you have been behind the curve and late in cutting back, then your earnings go down and it changes the valuation of the business."

The first thing Evans recommends is trimming staff if need be. "Do you have three people doing what one person could do? Are you overpaying?" he asks. While it may be difficult for some business owners to lay off staff, "when you are running a business, you are running it to have a bottom line," he says. "If you don't do that, none of your employees have security."

After scouring the labor pool, tighten up any operating problems, such as investigating why inventory routinely goes lost or missing, he says. After that, re-examine your credit-granting procedures. Ask customers or clients who you routinely bill for updated financial statements; run credit reports on them; and above all, don't be the last one to find out they've declared bankruptcy, he says. Lastly, see if you can negotiate with vendors for better prices — and if they won't budge, talk to their competitors, he suggests.

Koenig, of Woodbridge Group, says private-equity firms still have a "boatload of money" to buy the right small business. The best thing retirement-age entrepreneurs can do to ensure a sale at the right price — even during a recession — is to "run the business better than they have ever run it before," he says.