Working into retirement isn’t something most Americans would have anticipated as recently as five years ago but come 2012, 20 percent of the country’s workforce is expected to be 55 or older.*
Combine these demographics with the continued impact of the recession, and you can see a solid trend emerging that reflects more and more seniors and retirees choosing entrepreneurship to boost their retirement income and pursue long-held dreams of going into business.
In fact, statistics show that 15 percent of workers expect to start their own business when they retire.*
Why Experience Can Make for a Better Entrepreneur
Of course, starting a business at any age is high risk, and many retirement-age entrepreneurs face the very particular challenge of time. When you’re young, the imperatives of building a successful business and financial security for yourself and your family happens within a much wider window of time than it does for older entrepreneurs. The risk of failure and never being able to rebuild your retirement nest egg is a significant consideration.
That said, starting a business later in life brings with it a wealth of business experience, aptitude for what it takes to compete and succeed, and self-awareness that youth doesn’t always have on its side.
If this sounds like you, here are some essential tips and tools to help you get started.
5 Things to Consider as you Start a Business Later in Life
Below are some tips to help you formulate your business idea and put it into action – in the context of your retirement planning and needs.
1. Be Clear About What You Want
Starting a business can be more than a full-time job, especially in its infancy. So it’s important to assess what you want from your business and how much time can you dedicate to your venture. If you still want time to yourself, build some flexibility into your business planning and schedule, which gives you time to dedicate to other interests. Many business types give you the option to be flexible – home-based businesses, online businesses, consulting, freelancing, and so on. With this kind of flexibility you can adjust and scale your commitment as needed.
If you need some help assessing your readiness to start a business, use this “Start-Up Assessment Tool” from the SBA.
2. What’s Your Business Idea?
Whether you want to pursue a hobby or capture a market for your very particular skills, doing something you are good at and that you enjoy is essential to success. You will also need to ask yourself what you want – your chosen business path has to suit your lifestyle, your family, and your pocketbook.
And, remember, you don’t need to come up with the latest hot trend or reinvent the wheel. Most new business ideas succeed because they serve an unfilled niche in their community or industry or do something better or different than the competition. Read more about coming up with a business idea that works for you in this article: 6 Tips for Finding a Business Idea and Turning it into an Entrepreneurial Reality.
3. Does it Have Income Potential?
This is a tricky one and many entrepreneurs have run the risk of wearing blinders through this part of the business planning process.
But having a clear picture of the cost of starting a business together with its potential to earn income is critical – particularly if you are already retired and living on a fixed income. In such situations, focus on keeping your start-up costs low. You might want to consider starting a home-based business and make use of technology to your advantage (read 10 Technology Tools You Can’t Run a Small Business Without). Focusing on doing something you like and are good at (particularly if you have a reputation for it) will go a long way to setting you on the right path.
Talk to a small business expert or financial advisor also – they can help you gauge your initial costs and income potential as well as provide guidance on financing options and good cash flow management. This article by Anita Campbell of SmallBizTrends.com also offers some useful tips for 10 Businesses You Can Start with Little Capital.
4. Develop a Flexible Business Plan that Steers Your Business
Tasked with writing a business plan, most entrepreneurs would rather put off the inevitable. But the truth is, business planning isn’t rocket science and doesn’t require you to create the equivalent of a polished thesis! A good business plan is simple, flexible, and manageable – it steers your business, rather than prescribes it.
A good business plan should address your strategic direction and contain mini-plans that address the different aspects of your business. For example, you’ll need a sales and marketing plan, a finance plan, and potentially a staffing plan. As your business grows, so does your plan.
5. Take the Necessary Legal and Regulatory Steps to Get Started
Having the determination and cash to start a business is one thing, but there are several steps you also need to take to ensure your business is registered with the appropriate authorities – for taxation and licensing purposes. It’s also important to note, that all businesses require some form of permit, even home-based businesses. This quick checklist from the SBA -- 10 Steps to Starting Your Business -- guides you through what you need to do and also points to some useful resources, like the Permit Me tool which quickly suggests what licenses and permits you’ll need based on your business profile.
Another valuable tool from the SBA is “SBA Direct” which leads you to a variety of government resources (including financing and counseling) based on your unique profile and needs.
Have you started a business later in life? Swapped retirement for entrepreneurship? Please share your comments and experiences below!
- Taking the Plunge - Tips for Getting over the Fear of Starting a Business
- 4 Steps to Keep Your Business Planning Simple and Useful
- Becoming a Freelancer - Assessing your Readiness to Be your Own Boss and Tips for Getting Started
- Starting and Growing an Online Business: An Entrepreneur's Checklist
- Home-Based Business Smarts: Tips for Finding Opportunity, Starting-Up, and (oh yes) Thriving
- 5 Things to Talk to Your Accountant About
Note: Hyperlink directs reader to non-government Web site.
*Reference: The Senior Source , Statistics and Aging Information, Senior Employment