Why Starting A Small Business In Retirement Appeals To Baby Boomers
Starting a small business today is often done by the most unlikely and often unsuitably
qualified people ever to anticipate becoming profitable entrepreneurs.So many grey-haired nomads today lose their jobs through downsizing or retirement decisions. In Australia, they sell the family home and buy a caravan or if they can afford it, a Recreation Vehicle and take off to travel around Australia. After all, this has been their dream; it is what they spent all those years working towards and now they feel it has become 'their time'.
They come to a regional city or some other location where they see an immense business opportunity and decide to set up a small business to service what they perceive is lacking. After all, it may well be what they have been doing for the past few years or they think they have all the right contacts to access the goods or services through at a substantial discount, and besides, they don't need to take out a business loan to service the idea because they have their retirement money tucked safely away in a bank.
Unfortunately for them, this is their first big mistake.
The first huge mistake is using their own retirement funds. These are assets and should only be used as collateral. Once they have gone, they have gone. Frittering money away in a continuous effort to prop up a failing or non-existent bottom-line has to be one of the easiest mistakes to make if you have access to cash money. Small businesses can become big,black,money-sucking holes in your financial affairs.
I cannot emphasise strongly enough to seek good financial advice from an accountant. Do a series of strong due diligence checks and double checks and then make up your own mind. Clarify the results of your due-diligence check figuratively if possible by drawing up a strong cash flow chart and then breaking that down into weeks so you are aware of what you need to bring in from the business monthly/weekly/daily. This tracking allows you to keep a finger on the pulse of your business without losing sight of the reason as to why you started the business in the first place.
Once the business has opened, these things sometimes don't get done early enough or put-off indefinitely simply because you will become time short.
If the city or town is unfamiliar territory, or you know relatively few people in the area, you will find doing this due diligence difficult. People in country towns are very friendly, but they rarely tell strangers everything about the local politics or family misunderstandings that are part and parcel of a small communities history. Sometimes, these ill-feelings can divide a town and it's too easy to offend the wrong people.
Before jumping in and starting your own small business after retirement, it is always a good idea to make sure that you actually do spend some time in retirement; if you can afford to do so.
You may need to do this because you have worked so many years to get your retirement and because you will likely be emotionally bereft for a time once you leave your job permanently. Even if you have hated your job for the past 5 years, you will feel a sense of loss at not going to work every day. Give yourself some recovery time before jumping back into the fray that a small business demands.
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