Maybe you are bored. Maybe you have been downsized. Maybe retirement isn’t for you. Whatever the case, there are many reasons why someone over 50 may want to become an entrepreneur.
In fact, it is not surprising why someone might consider starting a business when they are older: You have a lifetime of experience and skills. You likely have both the time and resources available that were not there when you were younger. You are wiser, and smarter about business too. And people are healthier longer.
While that is all true, and good, it is equally true that starting a business when you are older carries challenges of which younger entrepreneurs need not worry.
The first is risk. A wise man – my dear old dad – once told me that an entrepreneur is a person willing to take a risk with money to make money. Risk is part of the gig. And generally speaking, the risks related to a new startup are two-fold: Time and money. Both of those risks are amplified when you start a business later in life:
- There is less time: When you are young, you have a plethora of time: Time to make mistakes, to learn from them, and time to start over if necessary. Older entrepreneurs just don’t have that luxury. If you start a business after 50, and sink a chunk of change into it, there is less time to recover financially if it goes south.
- There is less money (to lose): Yes, I am talking about the worst case scenarios here, but that’s the deal when analyzing risk – you have learned that sometimes, rarely but occasionally, the worst thing does happen. While older entrepreneurs usually have a lot more money, it is either tied up in retirement accounts or there is less available for risky investments because money is more difficult to replace later in life.
Another challenge for the older entrepreneur has to do with energy. Starting a business takes a lot of time and energy.
And not to get all Gloomy Gus on you, but there is one last issue, and that relates to Social Security. According to the Social Security Administration, “If you are younger than full retirement age during all of 2010, we must deduct $1 from your benefits for each $2 you earned above $14,160.”
With those issues and caveats in mind, consider these things when looking to start a business:
1. The hardest gig is starting a new business from scratch: Here, you have to come up with a great idea and almost-perfect execution. It is done all the time, yes, but if you have never done it, be judicious about this option.
2. Buying an established business: An established business is a lot less risky because it has a track record. You are not starting from scratch, there is already a brand and goodwill, and best of all, because you are able to review the books, you will have a pretty good idea of what to expect.
3. Consider a franchise: Franchises are great because someone has already engaged in the trial-and-error portion of the business. The franchisor has (ideally) ironed out all of the kinks and created a system that others can follow in order to duplicate the franchisor’s success. They have a brand, and a plan, and it would be your job as a franchisee to follow that system. For many retirees, that is attractive.
4. Look into consulting: You know a lot by now. Businesses need that knowledge and are willing to buy it.
Whatever route you take, let me suggest that you also look for something that allows you to tap into your transferable skills. If you have spent your career in accounting, it would be a waste not to use those skills in your new business. No, you need not become an accountant again – after all, part of the fun is trying something new – but finding a business where that skill-set can be utilized is smart, and again, people may pay you for that.
5. Have fun: Being you own boss later in life can be a blast, just be sure that your new business does not cost too much to start and does not take too much of your valuable time.