Retirement conjures up a different set of dreams for different individuals. Some are counting down the days until they can stop working entirely to travel the world, engage in their favorite hobbies, or spend more time with family. But others on the cusp of retirement are planning for an entirely different venture: to finally go out on their own in the business world.
Whether this goal comes out of necessity or one’s own personal desires, entrepreneurship is growing in popularity among older Americans. The numbers speak for themselves: people age 55 to 64 made up 25.8 percent of the businesses started in the last 12 months, according to the Ewing Marion Kauffman Foundation’s 2015 Kauffman Index: Startup Activity.
Whether it’s an ambitious for-profit venture, or a consulting business in the nonprofit sector, there are many opportunities to capitalize on your talents during your golden years. The advantages of starting a small business include working on your own terms and schedule, exploring untapped passions, and/or using your skills to improve the lives of others.
While launching a new company can be fairly easy and inexpensive—especially if it doesn’t require retail space—it’s important to lay out a clear plan for your vision before getting started. And remember: building your business into a profitable venture isn’t an easy task, so be patient. As you work to establish a client base and get into a rhythm, it can be a frustrating process. With that in mind, following are five tips for becoming an entrepreneur in retirement:
1. Safeguard your savings
Work with a financial professional to ensure your assets are protected as you launch your new venture. The details behind such protection plans vary depending on what state you live in and the size of your company, so make sure you understand what’s involved. You’ll have a peace of mind knowing that even if your business fails, your savings will still be intact.
2. Network, network, network!
Chances are, if you’ve been in the workforce for a number of years, you’ve made a lot of valuable connections. These are key people that can help you get the word out about your business, as well as become future clients. Make a list of some of your best connections and set up individual meetings with each one. You can also form valuable networking relationship with members of the Small Business Association (SBA), your local Chamber of Commerce, and at specific industry functions. Attend seminars and trade shows and distribute your business cards. You never know what valuable advice or business deals or partnerships could come from those conversations.
3. Assess your strengths and weaknesses
Do you possess all the skills necessary to successfully launch and grow your startup? If not, perhaps you could outsource some aspects, such as marketing or accounting. That way, you can focus on your strengths, while letting another professional take control of the areas where you might struggle. If hiring outside help, or investing in an online system such as Quick Books can expand and improve your business, it’s well worth the cost.
4. Decide where your financing will come from
Calculating what it will cost to successfully launch your company will help you map out a game plan. If it’s a minimal investment, you may be able to use savings or take out a small loan. But if your dream is much larger than the amount of money you want to personally contribute, you may need to explore some other funding options, such as outside investors. These financial backers know investing in a company comes with a level of risk, but also has the potential for significant profit. Family and friends comprise a major part of small business funding, according to CNN Money’s “How to Find Your Angel Investor.” It is easier to present your business plan to relatives, as they already have confidence in you.
5. Plan what will happen to your business when you leave
Let’s face it: you can’t work forever. While starting your own business can be satisfying for many years after retirement, there will come a time when you no longer want to—or are capable—of being in charge. That’s why it’s smart to form an exit strategy before even starting your business. Do you plan to pass your company along to your children or grandchildren? Sell it? Or simply shut it down? It’s a good idea to have your wishes in writing and include them in your estate planning process to ensure things are handled the right way.
Bottom line: with proper planning, networking, and strategizing, the business of your dreams could become a reality in retirement. Don’t delay on mapping out a plan to see if your small business ideas could come to fruition during your golden years.