Are you thinking of starting a new business in retirement? If so, you’re not alone. Starting and running a business comes with challenges, but can be rewarding for active retirees who want to bring in income while serving their communities. Although many retirees open businesses out of passion and a sense of purpose, any income you do earn will help you pad your retirement savings so you can spend a little more or leave a larger inheritance. Here are some considerations for starting a business in retirement.
Almost a quarter of new businesses in 2013 were started by people age 55 to 64, according to the Kauffman Index of Entrepreneurial Activity. A 2009 study sponsored by AARP found that of people who changed their occupations, about 31 percent said they went from working for others to working for themselves.
There are multiple reasons for this. Some retirees open businesses to supplement their retirement income and savings, but others decide to hang out their shingle in order to be productive and contribute to society in a way they weren’t able to do earlier in life.
“I want to keep doing this. I really do want to help people,” says Isabel Chamberlin, a retiree who runs Paws4Fitness, which conducts fitness boot camps for dogs and their owners.
There are several reasons why retirement can be a great time to start a business.
1. You have few or no financial obligations. The majority of businesses are started by college students or recent graduates. One reason for this is that these people have no one depending on them for income. They have no career to think about and no family yet to support. In retirement, you are also free of commitments. Your kids are grown and self-supporting, your mortgage is paid off or close to it, and you are free to take a little bit of financial risk because no one is dependent on you for income.
2 You have time. Running a business takes a significant commitment, and it can be difficult to launch a new enterprise while working full-time and raising a family. After retirement, there’s no job to go to and much of your day is yours. You have the hours and energy to pour into entrepreneurship.
3. Running a business helps you stay active. Although you might not have quite as much energy as you did in your 20s, many new retirees are still healthy and vigorous. After the novelty and initial enthusiasm of retirement wears off, retirees often start looking for a new endeavor on which to focus their energy and passion. Starting and running a business gives retirees a channel for their energy and efforts.
4. You can take as much time as you like. Because there’s no pressure to succeed, as a retiree entrepreneur you can take your time in growing your business and spend as much or as little time as you like. Some retirees like to go full speed ahead into a second career, while others prefer a more relaxed approach and enjoy the freedom to not be working all the time. You can work on your business while retaining the flexibility to pursue hobbies or do volunteer work.
Many retirees leverage the skills and contacts they brought from their careers to start businesses in consulting or services. Others reinvented themselves and went in a new direction, like Chamberlin. After working in corporate sales for over 40 years, she decided to start Paws4Fitness to indulge her love of exercise and dogs.
Some of the most successful companies combine careers and hobbies. One husband-and-wife team started a business to sell cookies based on the husband’s love of cooking and his grandmother’s recipe, and the wife’s experience as a former marketing executive. Today it has grown to the point where thousands of cookies are shipped daily.
While encouraging retirees to explore their entrepreneurial side, retirement advisors recommend they limit their investments because if the business doesn’t succeed, they have relatively little time to make up the loss. You can afford a small loss, but don’t put your home or retirement savings on the line.
Taking small steps at first also allows you to test-drive life as a business owner, and gives you an exit if the business falters, or you simply decide that entrepreneurship isn’t right for you after all.
Most retirees with a dream of business ownership are looking for a low-cost, low-stress, home-based business that they can work part time so they can still enjoy their leisure and other activities. Here are some ideas that others have successfully applied.
One woman runs a personal assistant business, helping her busy clients by shopping for groceries, gifts, and clothes, setting up parties and meetings, working with travel agents to arrange trips, and taking care of their homes while they’re on vacation. Another person helps people organize and clean up clutter in their homes and offices.
Here are some other recommendations for choosing a retirement business.
1. Choose a business that aligns with your interests and passions. Your business is more likely to be successful if it revolves around something that interests you, whether that be sports or sailing, cartography or calligraphy. It might be something you were interested in earlier in life, or want to try out.
2. Evaluate your business idea objectively.Try to determine if there’s sufficient demand for your product or service, whether you’ll feel comfortable doing it, whether you are qualified to run this business, and whether there’s too much competition.
3. Make sure running the business would be compatible with your retirement lifestyle. Most retirees don’t want to work 40 or 50 hours per week. Ensure the business can meet your goals for it while leaving time for other activities.
4. Learn about how to run a business, if you don’t have previous background. As the business owner starting out, you’re the accountant, marketer, operations manager, and production manager, all in one. Learn how to manage cash flow and about any applicable laws and regulations. Consider taking a small-business course offered at a local college, the U.S. Small Business Administration, or your state business development association. There’s also a free Udacity course on how to build a startup.
This video discusses some part-time retirement business ideas.