MONEY MATTERS: A 2013 study of entrepreneurship found that more than a quarter of workers aged 65 and older plan to start their own businesses in the next three years.
Developing a business after you retire from your regular job could be rewarding personally and financially, but like most potential rewards it comes with risks and challenges. If you have an entrepreneurial vision, here are some tips that may help you maintain a realistic perspective.
Don't invest more than you can afford to lose. Current failure rates suggest that 50
percent to 75 percent of entrepreneurs may not succeed and could lose their savings. It's unlikely that you would invest all your assets in the stock market at age 65, and a similar logic applies to a new business. You don't have as much time to recover from potential losses as you might have had earlier in your life.
Do your research. Perform due diligence by researching all aspects of your business idea, including (but not limited to) competition, potential customers, marketing and sales opportunities, facilities and shipping needs, office and payroll costs, and supplies and raw materials. Put together a business plan with realistic projections of expenses and potential revenues for the first five years.
Consider consulting. If you developed expertise in your regular job or previous experience that might be used for consulting, this option could be a smoother transition to post-retirement employment than a brand-new business. Consultants often earn more for their time than regular employees and have more freedom to choose their own hours.
Be realistic about your time and energy. Starting your own business is a big project at any age, so consider how much time and energy you want to expend. If you're ready for retirement, you probably don't want to work 60 hours a week on your new business, yet many entrepreneurs may work longer hours than salaried employees.
If you do start a new business, keep in mind that you may have to file a variety of tax forms and other legal documents. Be sure to obtain appropriate professional guidance.
(Charles Sims Jr. is president/ CEO of The Sims Financial Group. Contact him at 901-682-2410 or visit www.SimsFinancialGroup.com.)