Have you ever fantasized about starting your own business and felt your retirement years could be the perfect time to pursue your dream? It could be the ideal time, but answering the following questions will help you better decide if and how you move forward.
Understand your own intentions. Are you starting this business to make money? Are you in real need to make extra income? Is this a passion project and profits are not necessary? If the true reason is to make money, then the choices you make next are critical. If this new business is nicety rather necessity, then your decisions are much easier to make, but nonetheless important given you are in retirement.
If profits are important, then it is best to choose a business that you not only know well, but truly enjoy. Starting a business is not for the faint of heart, and according to the U.S. Small Business Administration (SBA), half of all new businesses fail in their first five years. Encouragingly, however, various economic environments do not appear to impact success so if you fear a recession coming soon, that likely will not factor in your success. Doing something you love and are good at will not feel like work and you will push through in the tough times as opposed to a business that you are unfamiliar with.
Do your research before you start spending money. Planning a new business is easier than ever before thanks to online resources and you will have a large community to network with. According to the SBA there are over 30 million small businesses in the U.S. with over 400,000 starting each year. What is most important in your planning is understanding your customers. These are the people who are paying you and without revenue, there is no business. Many failed businesses are due to the founder coming up with an idea and investing in it, but never speaking to the paying customer first and finding out too late no one will pay for it. Customers are everything, so speak to potential customers first before doing anything else.
Consider your energy level. A new business can take an enormous amount of energy, and you not only need to be thoughtful about your health in general, but your energy level to work at the business. Countering this is are a number of studies showing the physical benefits of working in retirement, including the 2015 study of 83,000 older adults by the CDC journal Preventing Chronic Disease showing working retirees were three times more likely to be in good health.
If this new business is being created more as a passion, then your considerations are less impactful. However, you must pay attention to your expenses and unforeseen costs, especially if you are highly passionate about this as the inclination is to spend to support it. Consult with your financial advisor and tax advisor to ensure that this passion will not endanger your retirement plan.
Starting a business in retirement can bring you incredible joy and fulfillment and be financially rewarding. By doing your research, being honest with yourself, and tapping into available resources you can enjoy this next adventure to the fullest.
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