Tips for your golden years: starting a business after retirement
If you’re thinking of starting a small business after retirement, you’re in good company. Entrepreneurs age 50 and older account for more than half of small business owners in the U.S. You have many advantages over the 20- and 30-somethings. You have a longer lifetime of experience and insight. You know what you’re passionate about. You’ve built lasting business relationships in the workforce. You have more goal-setting practice and have learned from your mistakes.
You may even have the upper hand with investors. Biz2credit, an online resource that offers financing to small businesses, recently studied 32,000 business loan applications. Applicants age 60 or older received funding more often than any other age group.
No business is without risk, but here are some guidelines to help you avoid mistakes and ensure that your efforts pay off.
Decide on a business idea
This is often the greatest hurdle for entrepreneurs. Even the best ideas fail if there’s no market for them. Spend some time thinking about your day-to-day existence. What would solve a problem, fulfill a desire, meet a need or make your life easier? Identify products or services that are lacking in your community.
Make sure that any startup you consider is compatible with your skill set, lifestyle and resources. Is it something you’re capable of doing yourself, or will you have to hire help? The time investment is another strong consideration. A brick-and-mortar business might require your presence for more hours than you’re willing to put in.
As for funding, many small businesses open with a minimal investment. Others require significant financing. Carefully do the math before making a final decision. It’s unwise to invest anything that you can’t afford to lose.
Network to increase your know-how
By all means, use your connections. Meet with former associates for brainstorming sessions. Ask business leaders in your community to play devil’s advocate. You’ll pick up valuable tips on marketing, web design, cybersecurity, social media and other key aspects of running a business. Joining LinkedIn online will exponentially grow your contact list.
Your city probably offers resources for beginning investors. You should also contact the trade associations in your field. Many offer workshops and one-on-one mentoring.
If you’ve been out of the workforce for a while, it would be well worth your time to brush up on technology and social media. The use of digital platforms is widespread in the small business community. Between 75 and 84 percent of entrepreneurs use at least one platform, such as Facebook, for communicating with customers and displaying products and services. Embracing technology will keep you competitive.
Choose your business structure
Decide what sort of entity your business will be. The entity has a bearing on financing, responsibilities, liabilities, tax filing and protection of assets.
There are several types of entities. All have advantages and disadvantages, so talk through your options with an attorney and an experienced accountant. The regulations governing each type of entity vary depending on the jurisdiction.
Determine your financial needs
Factor in both one-time startup costs and ongoing expenses, especially if you operate outside your home. These may include the following:
• Licenses and permits
• Small business insurance
• Technology, business machines and office supplies
• Market research
• Advertising
• Grand opening events
• Rent and utilities
• Salaries
• Travel expenses
According to some experts, you should secure financing for at least the first 12 months of operation. Traditional sources include private financing and small business loans or grants. Crowdfunding is an increasingly popular alternative; startups are funded by raising small amounts of money, usually on the internet, from a great number of people. In 2015, around $34 billion was raised worldwide via crowdfunding.
Many business owners use a combination of methods to get up and running.
Decide on a business name
This may be one of the most important decisions you make. Would Pepsi be as popular today if the owners had stuck with the original name, which was Brad’s Drink?
When you’ve chosen the name that best defines your business, make sure that it’s not already trademarked. Then, get it registered. Do the same with your domain name, which identifies your business on the internet.
Obtain licenses and permits
Requirements vary according to the type of business you operate and where it’s located. Jurisdiction also affects paperwork. It’s wise to contact your city, county, state and federal licensing offices to ensure that you’re in compliance on every level.
Obtain adequate small business insurance
You probably know that you need property insurance, but there are several other policies that keep entrepreneurs from going broke every day. A good cyber policy, for instance, is a must. More than 60 percent of cybercrime was directed at small businesses in 2017. If you provide a service, such as family photography or hair styling, professional liability coverage protects you from dissatisfied clients.
Choose an accounting system
Accounting is a crucial part of succeeding in business. You’ll use accounting software for everything from creating a budget to tracking success. Your investment in a good system — or an experienced human accountant — will pay off.
Promote your business
You know from personal experience as a consumer that well-designed, user-friendly websites make a great first impression. Here are additional ideas for promoting your business; some won’t cost you a dime:
• Distribute flyers
• Purchase radio or TV ads
• Sponsor local events
• Register your business on Google, Yahoo! and Bing
• Link ads to Facebook and Twitter
• Start a blog
• Join and regularly participate in online communities in your niche
It’s never too late to pad your retirement fund or pursue your dreams. You still have much to contribute, and your chances of succeeding in business may be greater now than they’ve ever been.
Written by Hiscox Blog
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