By Devin Morrissey
Life is expensive. Cost of living is on the rise, and it seems like there’s no end in sight. The prospect of retiring and living out your days in comfortable bliss on the money you’ve saved is an understandably daunting ambition. Even if you planned well, came out of the market crash with your accounts intact, and adjusted to a moderate standard of living, there’s a lot of uncertainty in planning for retirement. You need to account for monthly spend, any trips or indulgences you might want to take, potential medical expenses, and other unforeseen costs, all over an unknown number of years.
The inability to accurately forecast for fiscal needs means that financial strategy changes. While there are plenty of tools to estimate costs, nothing is 100 percent and it’s often more comforting to have some sort of income generation on top of retirement savings. Plus, after working for so many years, who actually knows how to sit still? Or wants to?
Recent retirees are steadily generating a new trend: starting a small business after retirement. It may seem a little recursive to leave work only to start working again, but undertaking a new adventure can help direct creative energy, put a life’s worth of knowledge to good use, or create opportunity to pursue your passion project. However, there are a few key considerations to make before jumping into the deep end.
Choose Your Business Focus
If you’re going to start a business, you need to know what kind — both the product and the means of delivery. More than that, though, you’ll need to understand your motivation. Why are you choosing to start a business, and ultimately, what’s your goal? Delving into these ideas will help to narrow your focus.
If you’re opting to start a business primarily for financial reasons, then you’ll want to go a route with low upfront investment and fewer maintenance costs. Avoid a brick-and-mortar location, draw on skills you’ve already mastered, and keep the hours flexible. Becoming a consultant in your previous line of work is a great option. You’ll be travelling to your clients, can work remotely as needed, and you can draw on previous business contacts to start building a client base.
If you’re more interested in finally getting to pursue your passion project, then your focus should be more on personal fulfillment. You still need to be cognizant of your time and money spend — it takes a lot to be an entrepreneur. Start with a low investment model, if possible, and seek support from family along with local resources. If you’re selling a physical product, consider starting online or doing pop-up stands before commiting to a physical location. Simple sacrifices in the beginning can make a huge difference in your ability to scale your business later. You don’t have to hit your perfect vision right out of the gate.
Formulate Your Business Plan
Now that you know where you’re headed, it’s time to put some concrete plans on paper. The following questions will give you a few details to start with:
- Do you want a business partner? A partner can help offset the initial cost of business. Is there anyone in your life who shares your vision, or do you want someone to split the costs and responsibilities with? Remember that sharing responsibility also means having to compromise on business decisions from time to time.
- Do you plan to scale your business? Down the line, do you plan to hire employees, open multiple locations, or create a business that you’ll pass on to someone? These answers can affect how you legally set up your business and what type of space you occupy.
- Where will you get your first clients from? Do you know where, how, and to whom you will advertise? No matter how good your idea is, it doesn’t matter if no one’s heard about it. You can outsource advertising or take it on yourself, but either way, the success of your business may hinge on it.
- What are your knowledge gaps? If you’ve never run a small business before, you may need help with the business side. If you’re pursuing a passion that you haven’t been fully immersed in yet, there may be some technical pieces missing in your repertoire. Look into community college classes, local workshops, or online resources for opportunities to round out your education.
- How will you set your price? Setting prices is one of the hardest parts. You have to make sure you’re charging enough to not only cover expenses, but also to put some money in your pocket. Entrepreneurs often have to convince themselves that the product or service their offering is worth a high price tag, but remember that you’re giving your time, energy, and knowledge to create something that other people want.
- How will you bill clients? If you’re selling merchandise, then the question is fairly easy to answer. It’s not so straight-forward for service businesses or consulting, however.
There are a hundred more questions to ask, all of them relevant to policy or billing or your business’ mission. These are meant to get the ball rolling and trigger further research as you start to formulate your business plan.
Hit the Ground Running
Once you’ve got more of those questions answered, a fleshed out business plan, and the key to your new office (maybe), it’s time to literally get down to business. Be proactive from day one — if customers aren’t coming in the door, evaluate your marketing, look for opportunities, and keep learning. The world (and the free market) doesn’t give you a pass just because you’ve already paid your dues to the workforce.
When you start, know where your finish line is. Small businesses aren’t always profitable in their first year, or even the first five, so you need to have a plan. At what point is the investment no longer worth it? Or, on the much more optimistic side, how many regular clients (or customers) do you need before you can hire an employee to start doing some of the day-to-day tasks? Having these points set out upfront will give you goals to work toward from the very beginning.
Devin Morrissey prides himself on being a jack of all trades; his career trajectory is more a zig zag than an obvious trend, just the way he likes it. He pops up across the Pacific Northwest, though never in one place for long. You can follow him more reliably on @DevMorrissey.