Here's How to Successfully Start Your Own Business in Retirement
Ah, retirement. When you can finally kick back and relax on the beach in Florida. After years of hard work at the office, It’s your chance to play endless rounds of golf and for once, simply do nothing.
Or is it?
A growing number of older Americans are challenging the idea of traditional retirement as more and more retirees decide they want to keep working or pursue personal passions after leaving the daily rate race behind: the number of Americans over age 65 who continue to work has doubled since1985, according to a study by United Income. Some people simply need to keep a paycheck coming in to cover the bills, but many want some combination of both — to experience rewarding work on their own terms while providing themselves with additional financial security. But whatever the reasons motivating you to continue working, there are unique pros and cons to consider when pivoting to a second act later in life.
First, do some soul searching, career experts say.
“Ask yourself, what is it that you do well and enjoy doing, and find meaningful at this point in your life?” says Nancy Collamer, author of “Second-Act Careers: 50+ Ways to Profit from Your Passions During Semi-Retirement.” Many people think they know what they want to do, but when they research what a specific job actually entails, it doesn’t always live up to expectations. Make sure it’s realistic, too. If you were an accountant for twenty years, it may not work out for you to become an Olympic swimmer.
Don’t re-inivent the wheel if you don’t have to, Collamer says. It’s much easier to get a venture off the ground using contacts you already have instead of starting from scratch in a new field.
Network, Network, Network
The network you’ve built up over your years in the workforce is your most valuable asset, experts says. Reach out to people you’ve worked with over the years and ask them to get lunch or set up informational interviews. LinkedIn is your friend.
"That’s how you’re going to get a job,” says Chris Farrell, author of “Purpose and a Paycheck: Finding Meaning, Money, and Happiness in the Second Half of Life," not by sending out cold applications online. Solicit feedback from people whose opinion your trust. Ask them what your strengths and weaknesses were on the job if you're struggling to figure out what type of second career you want segue into way.
Don’t underestimate the support you can find through your college alumni association, local resources and trade associations, either, says Collamer. You can find free mentoring, online classes and workshops through organizations like the Small Business Administration. Look into a place like SCORE, which connects beginner entrepreneurs with businesses owners who have already built a business. It's a good idea to join a community of local entrepreneurs so you don't feel isolated working from home, Collamer says.
Get Financial Fit
“Debt is a dream killer,” says Kerry Hannon. "The biggest stumbling block people have when they're shifting careers or starting their own business is money."
If you your’e starting a new career, you're not going to make as much as you were in your previous career, at least initially, and if you're starting your own business you may not be able to take a salary at first (or only a very small one) as you reinvest in the business.
"It often takes three years to make a really successful career switch," Hannon says. "It’s not a sprint, it’s marathon." Create a budget for your new business just like you would for your household spending. Can you relocate to a place with lower cost of living or refinance your mortgage? Think about how you can cutback in other areas of your life to save as much as possible for your business.
Michael Lowe, 70, was a corporate lawyer for thirty years, but became bored after a few years of retirement.
"There's only so much yoga you can do," he says. While trying to pass time after he retired, he discovered he loved learning how to make cocktails. He took a risk and set out to start Green Hat Gin, the first gin distillery to open in decades in the Washington, D.C.'s area. Talk about a career pivot.
But Lowe was smart and partnered with his son-in-law, who had worked in the retail alcohol business and could provide the necessary connections to help get them off the ground.
Lowe was prepared for the high start-up costs involved in building a distillery from scratch — a capital intensive business. He couldn't have pulled it off without enough savings: he and his son-in-law put around $1.5 million into the business to start, and it took about a year for Green Hat to turn a profit. They also spent a few thousands dollars investing in training themselves: they signed up for a week-long appreciate program at the Dry Fly Distillery in Spokane, Wa., where they learned exactly how the distilling process works and what kind of commercial equipment they would need to buy.
Paul Dillion, age tk, also retired from his corporate job to pursue a cause close to his heart: helping veterans in the workforce. But he started freelancing while at his old job so he still had a steady paycheck. He began writing about veterans and businesses for Crain's Chicago Business, which gave him the exposure to eventually launch a start-up that became the non-profit Bunker Labs, a national network that helps veteran entrepreneurs start their own businesses.
He also relied on his connections to cut expenses when working on his start-up. He asked favors from friends, like using empty office space at a friend's company rather than pay to rent his own space in a building.
Prepare Physically and Mentally
Hannon fields concerns about ageism regularly. "Should I get botox?" is a question she hears a lot from retirees who are thinking about a second career. Instead of worrying about what they look like, she counsels clients to focus on the presence they project when they walk into a room.
"Whether it's walking or swimming, or what you're eating and good nutrition, you have that energy and that can-do spirit," she says. "You present a really positive image. People want to have you on their team, they want to work with you."
And energy is key to running your own business. You're not just the CEO, but the I.T. guy, the H.R. person and your own accountant, too. Plus, you need to have the stamina to pick yourself back up when you encounter bumps in the road. Be mentally prepared to encounter set backs — they happen to every entrepreneur — so they don't overwhelm you when they inevitably occur.
"It's not a leisure activity," Lowe says of running his distillery, which also has a tasting room and bar attached to it. "I'm more than full-time." Make sure you are fit enough to run a business that could require more than 40 hours of work each week, and may involve a lot of running around now that you are a one-man band.
Lastly, it may sound obvious but, do your research and take the time to do the mental planning. It's a step people can overlook in their excitement to create something of their own. You need to pinpoint opportunities for actual success and profit before you dive in head-first. Dillon says that's some of his best advice for people striking out on their own.
"I would have spent more time thinking about and researching potential clients and avenues that I could go down," he says. Having a network will help you meet people, but you can't land a client if there's no opportunity to be had. "I would have benefited by spending more planning time before I started my own business."
"It's ok to be a dreamer, but be a practical dreamer," he says.