3 Keys to Success for Encore Entrepreneurs
As today’s Baby Boomers prepare to say goodbye to traditional employment and lifelong careers, a growing number of them are choosing to remain engaged in the workforce, but in a new way—as their own bosses and on their own terms. People ages 55-64 are one of the fastest-growing demographics of entrepreneurs in the U.S. and now represent nearly a quarter of all new entrepreneurs.
The trend toward “encore entrepreneurship,”as it’s called, is attributed to many factors. Today’s seniors are planning on longer, healthier lives than previous generations, so instead of slowing down, they’re gearing up for the next chapter, which may last 30 or more years. At the same time, many Boomers who are approaching traditional retirement age have yet to recover from a recession that took its toll on retirement savings and home values. Owning a small business is one way to generate additional income in retirement.
Although resources abound, the secret to succeeding with a business in retirement may boil down to just three basic fundamentals:
- Stick with what you know. Consider a venture that is closely aligned with your area(s) of expertise so you can leverage the knowledge you’ve acquired and the contacts you’ve made throughout your working life. For example, if you’ve built a career as a journalist, you might retire to freelance writing. If you’ve been a teacher, tutor. If you’ve been a tax accountant or attorney, offer your services on a consulting basis.
- Be careful about startup costs. Because every business is different, the amount of up-front capital you’ll need can vary tremendously, from next to nothing (computer, phone, website) if you plan to offer your services as a consultant (although keep in mind that, depending on your business, you may also need to apply for state or federal licenses, or obtain professional liability or malpractice insurance) to a potentially considerable investment in inventory, equipment, office or production space and the hiring of employees. Regardless of how much you may need to launch your business, resist the temptation to use your retirement nest egg as seed money. Instead, talk to a financial professional about your options or check out some of the U.S. Small Business Administration’s tips for financing a business (www.sba.gov).
- Get help with the business of running your business. As the subjectmatter expert, you know the technical aspects of your business’s work product or service. But do you know what it takes to run a business? Have you drafted a business plan? Structured and registered your business? Do you know how to develop a profit and loss statement? And if your venture takes you beyond the world of consultancy, do you know how to write a job description and recruit and retain employees? How about managing suppliers, contractors and inventory? And what about your exit strategy? While you may be looking forward to this new chapter in your life, you probably won’t want to work forever. Do you have a plan for when and how you’ll sell your business? When launching a new business, the considerations can be overwhelming, which is why it’s critical to partner with professionals who understand the business of business.
Encore entrepreneurship can be a great way to stay active, follow your passion and supplement your retirement income—as long as you approach this chapter of your life with your eyes wide open.