Most people think of retirement as the end of their income, but it doesn’t have to be. Although traditionally, retirement is supposed to be a time of leisure, relaxation, and rest, but with today’s high cost of living and also generally longer life expectancy, many retirees are opting for semi-retirement or even starting a business post-employment.
Starting a business in their retirement may seem like a dream come true. However, it must be done with a lot of planning and foresight. Otherwise, you might burn a huge hole in your retirement savings and be forced to go back to work – and a job may not be easy to come by at that time and age.
Business in retirement is not a bad idea if you have a clear and effective strategy on how your business can empower your retirement.
Here are some tips before you decide to take the plunge:
What should you consider?
1. Aligning your passion with the audience
For retirees who dream of starting a business after they’ve left their 9-to-5 job, it often stems from their passion. Starting a business in something they love to do that they didn’t have the time to do before can be a great idea.
However, essentially a business should be making a profit, though not immediately. Therefore, it is important to ensure your business idea is aligned with the market that you are targeting.
For example, providing a service that caters to college students without some understanding of the audience can be a recipe for disaster. The market you are targeting should be one you can relate to easily, or at least have experience dealing with them before.
2. Knowing your financial limit
Never raid your entire retirement savings to fund your business. Sure, starting a business requires a working capital, but before you start cashing out your retirement fund, draw a line on when to stop.
Knowing how much money you can afford to lose before calling it quits can save your retirement. Constantly withdrawing cash from your hard-earned retirement fund can eventually drain it, and as a result, you may be forced to go back to work to survive financially.
Look for a business idea that requires minimal investment. If you need a huge capital to get your dream business off the ground, consider getting funding or investors. Whichever way you decide to kick-start your business, refrain from investing money you can’t afford to lose.
3. Having a sound business plan
A business should not be treated solely as a hobby, especially if your financial lifeline is at stake.
Be really honest with yourself when determining whether your business idea is a viable and profitable plan. Ask yourself, what problem does your service or product solve.
Get opinion from peers and also people from the industry to get an idea on how to launch your business. Even if you are not looking for investors to start your business, it makes sense to “pitch” your ideas to different people to find out how feasible your business is.
Once you have a clearer idea, you need to evaluate your skills. Do you have the ability to make your business work? Hiring people to do it can be a good idea, but you will need to consider the higher operating costs with monthly salary and other employee benefits that you may be required to provide.
The best way to go about it is to ensure that you can start off on your own before taking on employees, when and if your business expands.
What are the pitfalls?
After you have assessed your goals and fleshed out your business plan, the next step is to be aware and understand the risks you may face. Some of these risks are:
1. Losing your assets
If your business fails, you want to make sure that your retirement savings doesn’t crash and burn as well.
The secret to this lies in the business structure. The structure should be one that protects your existing assets, so you can walk away unscathed if the business tanks.
This does not just involves your investment into the business, but it involves protecting yourself and your business from lawsuits. For example, if you are renting out your home to tourists on AirBnb, what happens if your home is burglarised and your guest loses valuable items, or worse, gets hurt? What will your protection plan be for situations like this?
Get advice from experts, such as lawyers and tax consultants to minimise risks that may occur in your business, and come up with ways to mitigate these risks.
2. Lacking the physical and mental commitment
As we get older, we tend to be physically and mentally slower than when we were at our peak. That’s inevitable. Running a business can be taxing to any entrepreneurs, not just to retirees.
Before you decide to start a business, it’s important that you are aware of your own physical capability. Prolonged health issues may hinder your ability to run the business, and you will need to be completely frank and objective when considering this aspect.
A business can also be time consuming, especially in the initial stage. If you are looking forward to spending your days at the golf course, or taking care of your grandchildren, you may want to re-evaluate your idea of starting a business, unless it allows you the flexibility that you need.
What are some low risk business ideas for retirees?
As retirees are at a time horizon where they cannot tolerate high financial risks, they should consider low-cost, home-based businesses that can be run part-time.
Here are some business ideas that you can consider in your retirement:
1. Providing freelance service
With the rise of the Internet, you can easily offer your service online on a freelance basis. For example, websites like Freelancer.com and Upwork.com, you can list your services online.
Services you can list on these sites include writing/translation, designing, mobile and web developing, accounting, as well as consulting.
These services usually do not require you to get out of your home, making homepreneurship an ideal solution to your retirement business.
2. Selling products online
If reselling or creating products is more your cup of tea, you can make use of websites like mudah.my or even etsy.com to sell your products. There are also various Facebook groups that allow you to sell your products online.
3. Writing a book
With years of industry experience, you can even consider writing a book. However, this idea will likely take longer to achieve results, and will also largely depend on your understanding of your target audience.
If you are able to snag a publishing deal with a publisher who agrees to publish and market your book, you are looking at an average of 10% royalty for every copy of book your sell. The risk is low for this as long as the publisher agrees to foot all the promotional, marketing and printing cost for your book.
If baking or cooking is your passion, you can easily turn this hobby into a business. Facebook group such as JOBS for Caring Moms MALAYSIA – Babysitter, Tutor, Daycare encourages mothers and women to sell their products in the group.
You can sell customised cakes or cupcakes to individuals, or sell different types of cakes to cafes for them to resell to their customers.
Going in with eyes open
Starting a new business, especially in retirement, can be an exhilarating experience, but doing it without a clear strategy can lead to a financial disaster that you cannot afford. Being adventurous in your retirement still requires a reasonable amount of precautions.
Regardless of which business you decide to go into in your golden years, remember to safeguard your retirement nest from unnecessary risks. Balancing what you love to do and what can make money is the key to a productive and successful retirement business.