Retirement can be the perfect time to start your own business. Whether you're itching to be your own boss and do things your way or -- like millions of retirees -- you need some extra income, starting a business can help make retirement everything you want it to be.
The key to a successful, fulfilling retirement business is choosing wisely. Evaluate business ideas in terms of lifestyle factors to ensure that your retirement business blends with your retirement plans. Then take a look at the bottom line to make sure your business will make financial sense.
It Pays to Choose the Right Business
When we were younger, most of us ended up in our jobs more or less by chance. Many of us didn't choose the industry, product, or location for our work; we just went where the opportunities led.
For most retirees, choosing work is more deliberate. What you do and how you do it, how you spend your time and money, and where you live are likely to be more important to you than when you were younger. So, it pays to carefully consider your options when deciding to start a new business.
Factors to Consider When Choosing Your Business
If you want your business to blend well with the rest of your retirement life, pay careful attention to the following lifestyle factors when picking your business:
Interests. You're more likely to have a successful retirement business if it's built around something that interests you. That could be sailing or calligraphy, bird-watching or baseball. Think about what you like to do now, what has interested you in the past, and what you might want to try in the future.
Goals. Setting goals is a great way to ensure that you live your retirement life purposefully. Unless you have a good idea of what you want to do, you could find your time slipping away with little sense of satisfaction. You'll have greater success in your business if it fits well with your larger goals for retirement. Knowing your goals will also help you effectively allocate your resources -- primarily, time and money -- to reach your desired ends.
Motivation. Your motivation for starting a retirement business will affect what that business should be. For example, if you are primarily motivated by making money, you'll need a business that's likely to provide the return you want. If you're driven to help children learn to swim, or to share your innovative quilt designs, or increase awareness about good nutrition, then make sure your business lets you follow your dream.
Work style. Your business should match how you want to work. This includes your need for social contact, your ability to motivate yourself and get things done, your level of comfort with change and transition, and whether you tend to focus on details or the big picture.
Where you want to live. Your business might not be location-dependent. For example, you might sell products online or travel to your consulting clients. But most retail and personal service businesses need to make sense given your physical location. Where do you plan to live in retirement? Does your business idea suit that location?
Skills. To operate your own business, you'll need to have the skills of both an owner and a worker. The owner makes the plans and the worker carries them out. You need to have these skills already, or be prepared to learn them -- or plan to hire some help. Evaluate your business ideas and your skills to see if you've got a good match.
How to Evaluate Business Ideas
If you've got a few business ideas that you like, you can use a table like the one below to determine how well your idea aligns with each of the lifestyle factors discussed above. The table is set up for three business ideas but you may consider more or fewer. For each factor, rate your business ideas using the following scale:
5 = Excellent alignment
4 = Very good alignment
3 = Aligned fairly well
2 = Somewhat aligned
1 = Not at all aligned
When you are done, add up the score for each business idea and enter the amount in the "Total" row.
How well does this business idea align with:
My Work Style
Where I Want to Live
What About Money?
When you look at the totals above, you may assume that your best business idea is the one with the highest score. Perhaps it is, but you might also notice the table doesn't address one very important consideration: money. Before you dive into your business, you'll need to answer some questions about the bottom line:
- How many customers will you need to make the money you want?
- Do you have enough time to serve the number of customers you need?
- Will your business be competitive enough to attract the number of customers you need?
- Can you finance your new business?
These questions are your reality checks. Your business idea isn't likely to make good sense unless it passes each one.
Getting More Help
Choosing the right retirement business takes some work -- but it can be enjoyable and exciting, too. If you're ready to take the next step, check out Nolo's Retire -- And Start Your Own Business, by Dennis J. Sargent and Martha S. Sargent. The book uses practical, thought-provoking tools to help you choose and launch the best retirement business for you.