For many seniors, retirement signals a new chapter in life to explore new dreams, passions or interests. Traditionally, retirement was seen as a time to slow down and enjoy life, explore the world, and enjoy those hobbies that may have fallen to the side during your busy professional career – like starting a new business. More retirees have been taking the leap into entrepreneurism in recent years. In a recent Small Business Trends for Baby Boomers survey, more than half of America’s small business owners were aged over 50. While some are motivated by their financial needs, others are spurred on by their need to keep working. Whether it is deciding on a business venture in retirement or mapping out how to finance it on a retiree’s income, here are a few things to get you started.
Answer The Key Financial Questions That Come With Business Ownership
Retirees are in a unique position when it comes to starting a business. While many may have built up savings and equity from their years of working or homeownership, they also often have reduced income streams to contend with. One option is to start a low-cost business like one with launching costs under $5,000.
Alternatively, if you need financing for your business venture, many organizations like New York Senior Planet are providing small business advice to seniors, including guidance on financing your business. One option is to apply for a personal loan, but this can prove problematic if you are relying on Social Security or pension payments alone as income. Another option is to raise angel or venture money, while you contribute the business idea and skills. However, keep in mind that most venture capitalists will ask for equity in exchange for their investment.
Decide Whether This Is A Long Term Goal Or A Retirement Hobby
When it comes to reasons behind starting a business in retirement, retirees can enjoy quite a few advantages. You can pull from decades of work experience and knowledge to avoid the common pitfalls of launching a business. However, not every older business owner is looking to run a business for the long term. It may also be a dream you wanted to achieve in retirement or a way of boosting your retirement income streams in the short term. You must define your vision for the business from the very start.
If you do want your business to continue in your later years or after you have moved on, it is best to draft an exit strategy. Consider developing a business succession plan. Remember that it is amendable as the years go on. Therefore, you may change your mind and decide to sell your business or shut it down when you feel the time is right.
Be Honest About The Time And Skills Involved
Launching a new business can be time-consuming. Most entrepreneurs do not follow a 40 hour work week, particularly at the beginning of their business. Tasked with wearing many hats as they launch their business, it is not uncommon to find business owners working 80 hours or more. Before starting a business after retiring, consider what it will take to get your business off to a good start – and whether you are willing to put in those hours. It may be a case of simply hiring help from the start, or scaling back your business goals to match a side business. Most importantly, define what success looks like for you when starting this business. Are you looking to simply remain profitable and utilize your skills? Alternatively, are you launching a business with growth plans in mind for later on?
There is no limit on ambition or entrepreneurship. Being retired does not preclude you from starting or running a successful business – regardless of your age. However, like all other business owners, you will face some unique challenges, and it helps to be prepared. Answering these and other critical questions before you launch means you are off to a good start.