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Starting Your Own Business in Retirement

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Summary: Starting a business in retirement can be a challenging but rewarding way to stay productive and earn extra income. In this article, we’ll review how to start and run your own business while maintaining your physical and mental well-being. Estimated Read Time: 8 mins

Table of Contents:

  1. Identify and Study Your Market
  2. Calculate Start-up Costs
  3. Develop a Business Plan
  4. Study Applicable Regulations
  5. Set Reasonable Goals for Growth
  6. Protect Your Personal Finances
  7. Getting Started in Your Market
  8. Maintaining Work-life Balance

Upon reaching retirement, you may find yourself pondering the question, “What’s next?”. For some, the idea of exiting the workforce can be nerve-wracking. But, if you find yourself wanting to utilize your retirement years as productively as possible, you may consider starting your own business.

Starting a business in retirement is a great way to utilize the skills and expertise you have mastered over the years. Running a business can help you stay productive, earn extra income, and depending on the success of your business, you may have the opportunity to pass your business down to your children, creating a generational revenue stream for years to come.

There is no question that starting and running your own business can definitely be challenging. Thus, there are many important factors you should consider before taking the leap into entrepreneurship. Below, we discuss how to start a business in retirement and the considerations you should make before doing so.

Identify and Study Your Market

Before you jump into starting your business, you’ll want to research and identify your target market. After all, if no one wants to buy your goods or services, your business won’t be successful. When conducting your market research, you should consider the following:

Target customers: These are the type of customers are you looking to sell to. You can also think of it as those who are most likely to want to purchase your product.

Market size: This refers to the amount of people will be interested in your goods or services. Regardless if you sell your products locally or online, you should consider how many potential customers exist for your business.

Market saturation: Your competition is another factor to consider. If many other businesses already offer the same goods and services as you, it is important to understand how will you win over customers. You’ll want to consider what will give you an edge over similar businesses.

When conducting your market research, you should make a realistic assessment of the viability of competing against existing competitors. Sometimes, it may be better to pivot to a different business idea than to try to compete in a heavily saturated market.

Calculate Start-up Costs

Before starting your own business, it’s essential to calculate your start-up costs. These costs can include everything needed to get your business off the ground, from the raw materials to marketing your product. Start-up costs can typically be divided into two categories: one-time fees and recurring costs. It’s important to have an idea of these costs so you can funny understand your initial investment. Some examples of these costs are below.

Examples of one-time costs Examples of recurring costs
Security deposit for a rented space Advertising and promotional material
Licenses and permits Monthly rent and insurance
Direct market research, such as surveys or focus groups Accounting & lawyer fees
Hiring a designer for your website Borrowing costs (loan payments, credit payments, etc.)

By calculating your start-up costs, you can get a better picture of how much you’ll need to spend upfront to start your business. Reviewing recurring costs can help you estimate your monthly expenses, which will directly impact your monthly profits. Consider creating a formal report or spreadsheet when putting together your start-up cost list. Having a start-up and recurring expense report can help you secure funding from a lender or investor.

Develop a Business Plan

A business plan is a roadmap to success for your business. A good business plan will detail your company’s goals and will provide guidance on how to achieve those goals. Additionally, a well-written business plan can help you get funding from an investor or lender when paired with an expense report. Even if you’re funding your business yourself, a business plan can help you organize your goals, marketing strategies, expenses, and more.

A business plan should include the following:

  • An executive summary and business description
  • Market analysis and marketing strategies
  • Financial projections and funding needs

A detailed business plan may be the key to successfully funding your business in the beginning. Small business loans are available to help entrepreneurs meet their goals. Like other loans, a lender will check your personal credit score when determining whether to grant you the loan. A strong credit score and a detailed business plan will help increase the likelihood of your loan being approved. Depending on the loan, you may be required to provide collateral.

Study Applicable Regulations

When running a business, especially in retirement, it’s important to identify and comply with any local, state, or federal regulations that may apply to your business. Failure to do so can result in hefty fines, operational disruptions, loss of business licenses, or criminal charges. Regulations will vary depending on your type of business and where you live.

During retirement, getting hit with these large fines could be devastating, especially if your business is still trying to find its footing. Thus, it is important to always understand the guidelines around running your business.

Set Reasonable Goals for Growth

On average, businesses take 2-3 years to become profitable. So, understandably, it can be easy to get discouraged if your business is having a slow start; that’s why it’s essential to set reasonable business goals. When establishing your business goals, network with other entrepreneurs to gain insight into how different companies grow over time. As your business grows, you should continue to reassess and set goals for continued growth.

You can take some steps to mitigate risk and support reasonable growth, such as using cash flow to cover expenses instead of taking on additional debt. If you must take on debt, it is typically better to avoid large, long-term commitments such as a mortgage and instead take on smaller commitments, like renting.

Protect Your Personal Finances

If you’re like most Americans, you worked hard to set yourself up to be financially stable in retirement. To protect that stability, you should keep your personal finances separate from your business. When you’re launching your business, or when profits slow, it may be tempting to tap into your personal finances to help your business. However, depleting your personal finances can lead to financial instability and stress.

An accountant can help you manage your personal and business finances. If you want to bolster your finances, there are some simple investments that you can make to build and maintain wealth. Diversifying your investments is a great way to maintain financial stability. This can be done through bonds, certificates of deposit (CDs), high-yield savings accounts, and more.

You can protect your personal finances legally by setting up a business entity (LLC, S Corp, etc.). In most cases, you must register your business with any state where you conduct business activities. Registration may vary from state to state. You can look up your state by visiting SBA.gov.

Getting Started in Your Market

Getting your product or service out into your market can take some time. As a new business, you should work on building your brand by getting your name out in front of people. You can do this in many ways, such as sponsoring local events, selling your goods at farmers’ markets, or attending local business conventions. Networking with businesses in similar or adjacent markets can also help you find and reach new customers.

Additional ways you can advertise your business:

  • Build a website or create business accounts on social media
  • Run a contest or giveaway
  • Share positive customer reviews

Maintaining Work-life Balance

As a business owner, it may be challenging to maintain a work-life balance. This can become especially challenging as your business becomes more and more successful. Maintaining a work-life balance is not only crucial for your mental and physical well-being but is also important for your business.

Below are some best practices for maintaining a healthy work-life balance while running your own business.

Learn to Delegate

As a business owner, you may feel compelled to take on most of the responsibilities for your business. However, delegating specific tasks to your staff while allowing yourself to focus on critical tasks can reduce stress and make your schedule more manageable.

Designate Time for Personal Engagements

Running a business can be demanding, and you may find yourself neglecting personal commitments due to your professional obligations. Many business owners feel pressure to ensure their company is successful, which can result in working excessive hours per week. Consider setting clearly defined work hours each day or going to a 4-day workweek to allow time for personal engagements.

Prioritize Self-Care

Taking care of your physical and mental well-being is essential, especially in retirement. As you become busy running your business, you may find self-care less of a priority. When you forego self-care, you risk both medical and financial hardship.

Protecting your health effectively and affordably while juggling your business obligations is possible. A great place to start is by reviewing your Medicare coverage and identifying coverage gaps.

If the cost of your prescription medications are putting a strain on your wallet, you may consider picking up a Medicare Part D prescription drug plan. If you already have a plan but are still struggling with costs, it may be time to research and compare different plans to find one that works better for you.

Medicare Supplement plans can significantly lower out-of-pocket responsibility when using your Medicare coverage. Not only can these plans help you save money, but they can also reduce the stress that can come with the financial burden of medical costs. There are several Medicare Supplement plans available. However, Medicare Supplement Plan G is one of today’s most popular supplement plans due to its wide range of coverage and benefits.

Using doctors and facilities that accept Medicare is another way to keep your medical costs affordable. If you enroll in a plan that involves a provider network, you may pay higher for care based on the doctor you see. To combat this, online tools such as the Medicare Care Compare Tool make finding and comparing healthcare providers easy so you can make the best decisions about your health. Additionally, finding the right plan type and carrier is equally as important. To compare plans, use the online rate form to get information on available plans in your area.

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