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Starting a Retirement Enterprise
After a lifetime of working for other people, the idea of being your own boss can be enormously appealing. If your inner entrepreneur is ready to come out, how do you go about ‘going it alone’?
Many of us would like to stay active – both financially and mentally – when we stop working. Starting your own business seems ideal: a way to make money and keep life interesting without giving up your independence. This may well be the case, but it’s crucial both to assess your mental preparedness and put careful plans in place before you start.
A Risky Business
You should take a clear-eyed look at how comfortable you are with risk. There is no point spending your entire retirement biting your nails to the quick: if you are one of nature’s worriers, stick to something with low start-up costs so you have less to worry about. If you decide it’s not for you after all, and you are considering retiring early, then you might want to consider alternative ways of staying active and making ends meet, such as phased retirement.
It’s also important to consider how your choice of business may affect your long term happiness; it must be one you will be content to work at over a long period of time. A 2002 study found that entrepreneurs over the age of 50 we more likely to get ‘locked in’ to their business even if they weren’t happy there, simply because the employment opportunities elsewhere favour younger workers.
Crunching the Numbers
Before you commit, draw up a strict financial plan. This is particularly important, both because of age discrimination and because you have fewer years to recoup any losses. As Nancy Collamer, author of Second-Act Careers: 50+ ways to profit from your passions during second retirement, puts it: “the general rule is: you shouldn’t invest more than you can afford to lose’’.
Retirement funds are best left as a safety net, in case your enterprise falls through; run the numbers and make sure you can still survive given a worst-case scenario.
What do You Do Best?
It’s often sensible to base your venture on something you already know how to do. The majority of successful entrepreneurs use the knowledge and contacts they already have to build up their own niche business; a smaller section go professional with a hobby, such as woodworking or crafts. The on thing you probably shouldn’t do is start a new venture with no experience at all. The odds of and unforeseen pitfall are simply too high.
“In 2013, 23.6 percent of new businesses in the US were started by entrepreneurs aged 55-64 – It’s never to late!”
Building Up Your Skills
There’s a good chance that some areas of your skill set could do with improvement. Financial planning, bookkeeping, legal requirements, and taxes; these are the essential skills of running a business.
Community college, business schools and adult education are your friend here. Sign up to a course before you start so you have the practical side covered. A solid grip on the basic s is essential, and learning new skills is a great way to keep your brain active.
You may also need to think about how your new venture will affect your living environment, If you are setting up as a dog walker, for example, you might only need a few leashes, but if you are setting up as a dog-coat maker then you will need somewhere to store all of your products and packaging. The chances are that this will be your own home so always consider the logistical implications.
Approaching a new business is very much about looking at all the ways it could go wrong – but this doesn’t mean approaching it negatively. If you can weigh up the risks and make sure that you can live with them, then you can go about your enterprise with no buried anxieties holding you back.
Buying a Franchise
You may prefer to buy into a franchise instead of going it alone. David Nissen and co-founder of small business financers Guidant Financial, estimates that more than 60% of new entrepreneurs are taking this option. The pros include benefiting from and established business model and learning from predecessors’ mistakes and experience.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes