The Senior Start-Up

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Not that long ago, retirement meant being put out to pasture, with long days punctuated by occasional games of golf and bridge. But today, with lengthening life expectancies, good health and dwindling pensions, many Americans are looking to retirement as an opportunity to start a new business — the Senior Start-Up!

Senior Start-ups: Common Characteristics

Older entrepreneurs have an important edge. Retirement packages, nest eggs, or home ownership affords them flexibility in the initial stages of a start-up, where funding is often critical. Because they can often rely on other sources for current income, they are often in a better position to take greater entrepreneurial risks than someone who is younger and has a mortgage and small children.

Start-up funding may also be easier to come by for seniors, who can draw from personal savings and a lifetime of business and professional contacts. Senior start-ups may also be looked on more favorably by lenders, who often associate older entrepreneurs with a lower risk of default.

Older entrepreneurs bring to the table a lifetime of creativity and business acumen. Having been tested again and again in their lives, they’re not afraid of failure or worried about what others will think. Instead of that urgency to “make it,” they get their satisfaction from the process of building their companies.

The type of businesses typically started by seniors varies widely. Consultancies, small retail businesses, and bed-and-breakfast establishments are perennial favorites. For many, Web-based business start-ups offer particular appeal, since they can be operated right out of your home in the early stages, often requiring no more than a high-speed Internet connection and a phone line.

While many senior start-ups are related to an individual’s former career, some break into completely new territory. This is often the case with “serial” entrepreneurs — those who have started up many different businesses over their lives and are experts at the start-up process itself. Whatever business you might consider, make sure you first do your homework. Talk to owners of similar businesses and scope out the market for such products or services in your area. Then, take the time to draft a formal business plan.

Not For Everybody

As attractive as starting a new business in retirement may sound, there are several considerations you should bear in mind before taking the leap. Start-ups can be physically and emotionally draining for a retiree. Seniors tend to work fewer hours and take more vacations than their younger counterparts. Ask yourself: Are you willing or able to work the long hours that may be required in a fledgling business?

There is also the matter of elder health concerns. For seniors, health problems can come at any time. Even if you are in top shape, you should factor in contingencies for unexpected health issues for yourself and your spouse.

Then there’s financial vulnerability. Failing at 60 is not like failing at 30, when you have lots of time to rebuild your assets. Seniors also rely much more on personal investments to supply a portion of their income. For these reasons, seniors are advised not to sink too great a portion of their investment portfolio into a new business and should avoid pledging personal assets such as a home as loan collateral.

Successful post-retirement start-up tips:

▪  Build on already established contacts and expertise. Seniors have a distinct advantage over younger entrepreneurs in their experience and long-established business network, which can give them a lead in virtually any business.

▪  Start small. When starting up a new business in retirement, many begin with a small consultancy and gradually work their way into a full-blown business. This will give you time to assess whether you’re willing or able to take on another full-time career.

▪  Don’t bet the farm. If you’re retired, you probably rely on personal investments for a portion of your income. Consider your income needs before investing a portion of your nest egg in a new business and think twice before taking on any personal debt.

To jump-start your ideas, here are some practical businesses that are popular among retirees —

▪  Adult Day Care

▪  Driving Service / Elderly Transport

▪  Home Handyman

▪  Sales

▪  Real Estate Agent

▪  Business Consultant

▪  Home / Pet Sitting

▪  Arts / Crafts

This commentary reflects the personal opinions, viewpoints and analyses of the Kondo Wealth Advisors, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by our firm or performance returns of any our firm’s clients. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Kondo Wealth Advisors, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.