20th March 2017 at 11:24am
The golden years have taken on a new luster as increasing numbers of the over-50s are turning their well-earned talents and experience into new money-spinning ventures.
Retirement is being redefined by the baby boomer generation. While their parents may have looked forward to afternoons on the golf course, many people heading toward retirement today are thinking about work instead.
With life expectancy on the up and increased pressure on finding ways to fund a potential 30 year retirement, it’s making sense to many individuals to do something in tandem with their pension to generate cash while they are still young and fit enough to do so. And let’s face it; some of us just don’t like golf.
Age no concern
Pension freedoms now give us many more options on how we tackle retirement; reaching retirement age doesn’t necessarily mean we have to down tools.
For people over 50, self-employment or starting your own business can be a way of using your knowledge and skills to earn money or turn a hobby or passion into a way of life. It also allows you to work flexibly and decide on your workload.
A plan of action
So if you’re not quite ready to punch out, here are some things to think about when starting your own business in or near retirement.
Play to your strengths
It’s one of your biggest advantages over the younger entrepreneurs out there: you’ve years of experience under your belt and have had plenty of time to find out what you’re strengths and weaknesses are, what you enjoy and what you don’t. Why bother learning new tricks when you can play on the ones you’ve mastered. Take that hobby or professional skill and find a way to use it profitably.
Determine whether your idea is really a good business plan
Don’t worry about finding the next hot business idea but do ask yourself some probing questions first – what problem does it solve? What need does it fulfil? Is there a market for it? Be honest with yourself.
How will it impact your life?
You need to consider the time involved. You may have just finished a 9 to 5 career, do you really want to step into another full time role that could potentially impact your life even more? It’s important to figure out a way to do it in a way that’s not too all-consuming.
How are you going to fund it?
Pension freedoms may have given you easy access to what you might see as some startup capital – your retirement savings. But do remember this is your retirement’s bank roll – if you squander your savings and your business fails, no-one is going to replace them. If you do dip into your savings make sure it’s manageable amounts, and that it’s only luxury spending you’re sacrificing, not essentials. An accountant and a financial adviser can help you decide how much you can risk, and where to draw the line.
Do you want to go it alone?
Think about the day to day running of your business and the manpower involved. Do you want the added burden of managing employees? Many people who start businesses in retirement don’t. On the other hand running a one-person business can be a lonely existence and not everyone likes that either. Decide which setup is the best fit for you before getting too far into the process.
Leverage your assets
Not only do you have a lifetime of experience and skills to bring to bear, you’ve most likely built an impressive network of friends and former colleagues too. That gives you immediate access to potential customers as well as consultants who can help you get your business off the ground. And even if you don’t have the right person to perform a specific function on speed dial, someone in your network potentially does. These contacts are also a great way of spreading the word about your business.
Understand your limits
Another great aspect of this wealth of experience you’ve built over the years is you know what you are not good at. Don’t delude yourself into thinking you can do everything and put your business at risk as a result. Make a list of everything you’re good at and hire experts for everything else.
Set yourself clear goals and time limits
Setting up a business is actually rather easy; the hard part is getting it operational. Be methodical, write out a business plan with targets and milestones, and make them realistic and achievable. You’ll have plenty of time to expand later. Keep track of all targets and if you can’t hit them, find out why and adjust your plan accordingly.
I mentioned earlier about not learning new tricks, however, given we now live in a digital age, if technology is something you struggle with then you may need to learn social media, online commerce, website management and other technical skills. The benefit of having an online presence is it can be a relatively cheap way of advertising and transacting on a global scale, and done well can give you the look of a high-end retailer.
Embrace your family
If you struggle with digital technology, the younger generation in your family circle can provide useful guidance on this sort of thing; they are always going to be more up to speed with developments in social media. So pick their brains, get them to tell you about the latest trends and make use of their skills.
Work can be taxing
Another thing to consider is tax. Anyone boosting their earnings by running a business – either full or part-time – is also likely to have to pay tax on their earnings. The basic rule is if you’re making a steady income from whatever you’re doing, then you’re going to be liable for tax. Using an accountant is likely to be a sensible move.
Don’t expect fame and fortune overnight
You may need to try several things and radically change your initial business plan before you find a formula that works. Adopt a test and learn approach, be prepared to be flexible.
For more information
If you do decide to go it alone and start a new venture then HMRC are good port of call for more information. They’ve compiled a number of guides on a host of different topics; these can help get you started and give you a good insight on complex issues such as your tax obligations. All are listed on a handy homepage on their site and well worth a visit.
A job well done
A working retirement can bring more than just financial reward; there can be a lot of job satisfaction too. While starting a business does take work, retirement is actually a great time to pursue a new venture, in the words of C.S Lewis ‘you are never too old to set another goal or to dream a new dream’ .
The information in this blog or any response to comments should not be regarded as financial advice.
Have your say. We’d love to hear what you think. Simply leave your comments below. You don’t need to register to do this. Leave us your comments and details and you can post as a guest’.