Post-Retirement Entrepreneurship Tips
October 18, 2006
While most of the entrepreneurs getting attention these days may be fresh out of business school, a significant and growing number of budding entrepreneurs are 50+ years old. That in mind, it's good to sometimes revisit basic "rules" before taking the plunge. Considering your own startup? See if any of these tips resonate with you.
Currently, older adults are drawn to self-employment for a variety of reasons. Some are disenchanted after years in corporate America and crave the autonomy of being their own boss. Others see a chance to finally pursue a dream or hobby. And some are driven by pure necessity: they need income and can't find other work. Meanwhile, it is becoming increasingly easier to start a business from home with just a computer and Internet connection.
These budding entrepreneurs have good ideas or concepts they want to pursue and make tangible. They have decades' of work experience, not to mention life experience. And perhaps they even have some ready cash from a downsizing package or a mortgage-free dwelling.
In fact, with more Americans reaching retirement age in better health, odds are that fewer and fewer of them will be interested in a traditional retirement, even if they can afford it. A 2004 Rand Corp. study found that self-employment rates rise at older ages. In 2002, the rate of self-employment for the workforce was 10.2 percent, but the rate for people aged 50 was 16.4 percent. While the 50-plus crowd made up 25 percent of the workforce, they composed 40 percent of the self-employed.
Further, a 2003 AARP survey found that about 15 percent of so-called baby boomers expect to own businesses in retirement. That percentage is likely to grow as the workforce grays and as more adults say they want to keep working past typical retirement age.
In a recent response to a budding entrepreneur who needed some confidence in decision-making, Fortune magazine senior writer Anne Fisher provided some tips from Jeff Williams, a startup consultant who has helped more than 4,000 clients launch their own enterprises. Williams is president of BizStarters, which provides coaching and training to people over 50 who want to strike out on their own. See if five of Williams' tips (below, via Fisher) for anyone who is wondering what kind of company to start resonate with you:
Look for an industry that will truly engage you. Why sink your sweat and savings into a startup only to find yourself burnt out on yet another treadmill?
Understand the income potential relative to your needs, and your investment comfort level. Take a hard-nosed look at startup costs, your local competition, and your willingness to risk your savings. Take into account the fact that it takes most new businesses at least three years to break even if they last that long. According to research by the Small Business Administration, about 66 percent of startups with employees close in their first four years. And nonemployer businesses, which account for 75 percent of all U.S. businesses, are even more volatile, according to the SBA.
Says Williams, "Later in life is not the time to shoot craps and risk your financial security."
Day-to-day variety versus uniform business If day-to-day variety is important to you, rule out businesses that involve doing the same thing for each customer. The idea here is to find something that will keep you interested passionately. See: Tip 1.
Love or loathe technology? Every entrepreneur has to make peace with the fact that technology changes nearly all aspects of his or her business, even if the company isn't in tech. It might lower costs for you or a competitor. It could make your product obsolete or make it the must-have.
"While most businesses require some computer use, consider the extent to which you'll need to use other technologies like wireless gadgets, the Internet, and various [types of] software to help you manage your business," Williams suggests. "If you hate technology and would rather not bother with it, can you afford to hire technical help?"
Otherwise, evolve or be left behind
Franchising? Proceed with caution. "Be aware that, with a franchise, you will always have a business partner the franchisor who takes part of your income," Williams says. Proceed with caution when considering a franchise: talk with others who have bought outlets from the same company; make sure you understand everything the franchisor will expect from you (including how disputes, if any, will be resolved); and hire an attorney who specializes in franchising to explain the franchise agreement to you in detail.
Successful entrepreneurs are calculated risk takers. They know that building a long-lasting company will be difficult. However, they also know the task is likely to be achievable if they put their energy and intelligence behind it.
Trying to ensure startup success is far from an exact science, Brad Sugars, founder of business coaching franchise Action International, recently wrote at Entrepreneur.com. "The most important advice I can give you is to keep learning. New knowledge is vital to the success of any new venture you might choose to take on."
It's never too late to revisit past dreams to be who you might have been.
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