Starting a business in retirement is a road less frequented by many individuals, and while it might seem impossible at first, thousands of retirees start businesses every year, leveraging their experience and knowledge to get their small empire off the ground.
At first, it might seem strange having to start a business in a time that’s considered your ‘Golden Years.’ Many tend to use this time to relax, travel, take up new hobbies, learn new skills, connect with friends and family, and some even continue working as remote entrepreneurs or freelancers.
While it’s all possible to get the most out of your retirement, the bad news is that current economic conditions have pushed many former retirees back into the labor force. As the cost of living rapidly rises, in part due to lasting effects caused by the global pandemic, many are starting to find it increasingly difficult to live off their retirement funds and savings.
A 2022 report by The American Association of Retired Persons (AARP) found that roughly 1.7 million retired Americans have returned to the workforce in recent years; this portion of people represents just over 3% of total retired Americans.
The combination of the pandemic and extended lockdowns caused millions to reconsider their position within the labor market. Some Americans decided to rather quit while they were ahead, leaving earlier than anticipated. Notably, around 3 million people retired early because of the global health crisis, which would later spark a ripple effect in the labor market, which would see an exodus of workers quitting their jobs in droves, later known as the Great Resignation.
Regardless of which side of the fence you may be, starting a business at this time of your life is possible, and it only requires a bit of courage and modern know-how to get your business up and running in no time.
Why should you start a business in retirement?
Age shouldn’t restrict you from owning a business or becoming an employer, in fact, it should only encourage you even more.
According to recent findings, the entrepreneurial landscape has slowly but surely been changing in recent years. In 2019 around 13% and 6% of Americans aged between 55 and 64 and 65 and 74 started a new business, respectively.
There are varying reasons why older Americans looked to start new businesses as they managed to enter their golden years. While some were looking to start their business as a way to generate more wealth, others did so to make a difference in their community.
Starting a business at this age comes with a bit more learning than you might expect, but it gives you an upper hand, as years of experience and industry-related knowledge can help guide you towards entrepreneurial success.
Benefits of starting a business in retirement
As the owner of a functioning and operating business, you will have the opportunity to generate more wealth that can go directly towards your retirement savings fund. Additionally, instead of having to rely on other investments or savings schemes, a business allows access to unlimited earning amounts.
Utilizing scarce skills
Some retirees enjoy starting a business because they have scarce skills. Although a lot of our economy now operates on autonomous and digital aspects, there’s a chance your skills and knowledge may still be needed to resolve certain problems.
Being a boss of any kind gives you more freedom and flexibility in your schedule. While a standard nine to five job may come with its perks and financial security, it doesn’t necessarily allow you to live life on your terms.
Creating something new
Many times, retirees might not be as tech-savvy as their younger counterparts, but there are cases where they were able to create something completely new and unheard of. These may be far and wide in between, but it’s possible to create a brand new product or service that can drive change within your community and leave a lasting legacy.
10 Things to know in 2022 when starting a business in retirement
Latest figures have revealed that Americans are looking to retire only later in their life than two decades ago. According to research by Gallup, the current average retirement age is up from 61 in 2022, up from 59 in 2002.
American workers who are currently in the workforce have been long contemplating whether they should quit their jobs and enter early retirement. Yet, rising inflation, soaring gas prices, and aggressive interest rate hikes have made it a costly and difficult decision together.
For the handful of soon-to-be retirees, who may have some disposable cash, and who are not quite yet ready to settle down, here are some things to know when starting a business in your retirement.
Don’t wait any longer
For many entrepreneurs, starting a business takes years to get off the ground. The ample planning, running business ideas back and forth, and having to secure the financial means can take years before their business idea becomes a reality.
Seeing as there is already so much that can stand in the way of you and your business, it’s understandable why so many people say you shouldn’t wait or hesitate too long before opening your business.
Of course, it’s good to have a plan at hand that will help you navigate the road ahead, but the longer you wait, the harder it will be for you to make a bold move. If you are certain you have the knowledge, financial means, and capacity to start and run a new business, why wait any longer to start planning?
Have a foolproof plan
No business comes to life without being thoroughly planned, and while it can be annoying to think of all the meticulous planning you will need to do beforehand – it’s safer to have done your homework than to go into it completely blind.
Make sure you have a firm grasp of what your business will be, and the type of services and products it is going to offer. Next, make sure there is a need in the market for your business, and that it’s not already over-saturated. Then, have a balance sheet of your financial situaton, this will help you see where your funds are being used, and how you will be able to make that money back.
Always draw up a business plan, even if you’re not an expert at this, get someone who is to help guide you through the process.
Learn new skills
A lot has changed in the last couple of decades, and we’re not only talking about technology, social media, and software. Consider how much your workplace has changed and adapted to new trends in the last couple of years. From the people you worked with, to the programs you used, and systems that helped keep everything up and running.
There are several new-age skills you will need to help run your business. From online marketing techniques, billing and invoicing software, working with younger employees and customers, and of course keeping up with the latest trends.
Regardless of what it may be, you will need to take some time beforehand to learn a few new skills. Make sure to spend a bit of extra time on this step, as it will help make the road to business success a bit easier.
Do it because you want to, not because you have to
For some retired Americans, returning to work, or starting a business is now more considered a means of financial survival than ever before. While this is relatively alarming as it gives an indication of the challenging times we’re currently facing, doing something because you have to, as opposed to because you want to take a toll on your happiness and overall health.
Employees quit their jobs for a lot of reasons, but some often do so because they realized they were doing something they didn’t enjoy anymore.
The same goes for starting a business at this age. Regardless thereof, make sure that it’s something you will enjoy doing for the next couple of years, without it taking a strain on your health and wellbeing.
As a new business owner, you’d like to see your ideas grow into a successful business empire one day. While this is at all possible, it doesn’t tend to happen overnight as well.
A lot of successful businesses these days started small, with a skeleton staff and bare minimum finances. Whatever you have in mind, look to start small, instead of jumping full force into the market.
When you start smaller, it lowers your risk of losing money, and not managing business operations properly, and can help you better understand where potential pitfalls may be.
Take some time to research
In the old days, it was a bit more of a challenge to gather information or research market needs and trends. Today, there’s no such thing as having limited access to market and industry-related research or trends.
The internet is filled with an array of blogs, websites, surveys, reports, and analyses, on nearly everything. Whatever it is you want to know, you can easily find it online.
This is why it’s important to take some time to research your business idea, and of course the market you’re looking to target. If you’re looking to sell to a specific demographic of your community, make sure to look at their needs, financial position, and whether there is an actual demand.
Don’t make unnecessary bold decisions
Being a business owner or entrepreneur requires making bold and risky moves now and again, but as a retired employee who recently opened their brick and mortar shop, you may want to mitigate any unnecessary decisions that can financially hurt your business.
If you feel you need a bit of guidance, see whether there is someone in your industry or field that can help you. They don’t necessarily have to help with the decision-making process, but it’s always a good idea to get a second or third opinion on something.
Being a risk taker is part of being a business owner, but when your life savings or retirement fund is on the line, the situation should be handled with caution at all times.
Learn to network
Networking is a big part of modern entrepreneurial culture, it’s become so ingrained in the 20-something tech-savvy entrepreneurs we see today, that some experts now write books and courses on how to become successful at networking.
Networking isn’t simply about having a contact list of people you can call when you’re in a tight spot. Rather, networking should be seen as a way in which you can build contacts with people that can help generate more traffic for your business or even perhaps offer you some form of collaboration.
Networking is a very important aspect of every business owner’s journey, and it’s important that as a retired person, you know how to work and talk to people and build a healthy contact list of influential entrepreneurs.
Learn to adapt
It’s time to stop being stubborn and start learning how to adapt. No, we’re not saying you have to completely go out of your way to accommodate every single customer there is, as this is simply impossible, but rather it’s time to look at modern trends to see what current consumer demands are.
Learning to adapt can come in many shapes and forms, and it all depends on how much you’re willing to change to ensure your business stays relevant. It’s difficult for someone at your age to constantly stay on trend, or know exactly what the media is currently talking about, so that’s why you should find ways to stay informed.
Enjoy your retirement
Lastly, and perhaps most importantly, take time to enjoy your retirement. You have managed to work for years, even decades to finally have some freedom and flexibility in your schedule to enjoy the finer things in life.
As a newly dubbed business owner, you might need to take some time now and again to step back, and busk in the time you have available.
If you feel that the business is taking too much strain, whether it’s on your finances or even your personal life, reconsider whether starting it in the first place was the right decision. Whether you make success thereof or not, your retirement should be filled with years of joyful experiences.
Not every retiree will be looking to start a business during their golden years, but sometimes you may find that one odd person who simply can’t let retirement pass them without having to fulfill their dreams of becoming a business owner.
Whether this may be your or not, make sure that you take your business ventures seriously, and that you spend some time getting up to date with all the latest and newest business trends.
A lot has changed in the last few decades, never mind the last few years in the post-pandemic era. Starting a business can be a fruitful experience, and doing so at an age where you have more knowledge and experience than your younger counterparts can help you leverage these advantages to make a growing success out of it.