When you think of the typical entrepreneur, what comes to mind? If you base your ideas of entrepreneurs off the images we see in the media, you’re probably thinking of a young, sneaker-wearing millennial like Facebook’s Mark Zuckerberg. However, Zuckerberg isn’t the typical face of a successful entrepreneur. In fact, many seniors have become successful business owners.
This is great news if you’re a senior or retiree who is looking to fill your free time with a new business venture. Kiplinger reports that more seniors are now starting their own businesses during their golden years. It truly might be better to wait until later in life before starting a new business after all.
Entrepreneurs and solopreneurs of all ages have different reasons for wanting to start their own small business. Maybe you felt restless and longed for a passionate life spent traveling the world. Perhaps you’re not a morning person and you daydreamed about working for yourself so you could sleep in a little later. Or maybe you know you’ve got an idea that could potentially change the world if you could just escape corporate America long enough to spread the word about it.
Regardless of your reasons for wanting to start your own business, business ownership includes some level of risk. There are unique considerations that all retirees should take when starting a business. After all, the last thing you want to do is waste your retirement funds on a failed startup idea.
Starting your own business in retirement is a great way to achieve financial security and boost your income — plus, you don’t have to spend your golden years answering to a boss. However, you do need a business plan to guide your business to long-term success. Not only will it serve as an action plan, but it will also be the crucial reality check you need to keep your business moving in the right direction.
Small business loans
Business loans are a great way for retirees to get a new business off the ground without tapping into their retirement money. As far as business loans go, it’s possible to get up to $150,000 in a Small Business Startup Loan or up to $5 million through an SBA loan. Before getting a business loan, however, be sure you understand the interest rate. These vary from loan to loan and can greatly impact your monthly repayment amount. It’s better to ask questions upfront than to get in over your head with a monthly expense.
What is payroll? Payroll is all about the process of paying your employees. If you need to hire help for your business, you’ll need to calculate how much your employees earn and (if you’re not hiring freelancers) take out taxes. It’s crucial that you maintain accurate payroll records to protect your business from an audit or lawsuit. You can simplify the process of handling payroll by using specialized software. Quality payroll software will have automated record keeping, tax deductions, and wage calculations.
Not all businesses require massive overhead costs. For instance, if you are tech-savvy or run an online business such as a design firm, you might not require the inventory, equipment, and office space of other entrepreneurs. If you have a business that can be run from the comfort of your own home, all you’ll need to consider is whether or not your home is big enough to house your business.
If you do decide that upsizing is for you, don’t rush into the decision. Take your time, do your research, and calculate your monthly budget before purchasing a bigger home.
Calculate the risk
There is some risk involved with running a business. Before starting a business, people of all ages, including retirees, need to determine whether the risk is worth it. In addition to the financial risks involved, it has been reported that 20 percent of businesses fail to survive their first year and half of all businesses don’t last more than five years. Although that means that you’ve got a 50/50 shot of lasting five years or more, it may not be worth it to you in the long run. To make sure you can confidently start out on the right track, invest in the services of a financial consultant who can look at your business plan, projections and working capital to gauge potential risks and wins.
Your golden years are a special time of your life when you can finally kick back and enjoy everything you’ve worked so hard to achieve. Retirement is about newfound freedom and making your dreams happen. If that dream includes launching your own business, be sure to do your homework first and plan accordingly. You don’t want to put yourself into a difficult financial spot. At the very least, consult with a financial planner and a business accountant to ensure you’re making the best possible decisions for yourself and for your business.
Carla Lopez retired a couple of years ago, but she didn’t lose her entrepreneurial spirit. She created Boomer Biz for retirees like herself who still have a desire to work and achieve. The site is a resource for people in their golden years who want to start their own business or go back to work doing what they love.
Are you looking for a new career or to advance in your current job? Career and leadership development coach Sharon McCormick can help! Call (919) 424-1244