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The baby boomers are in better health, living longer, and have more experience and education than their counterparts from previous generations.
According to the Kauffman Foundation, over 25% of new entrepreneurs in 2014 were in the 55 to 64 age group. This is a 10% increase since 1997. Fast Company reported older Americans are more likely to start a business because they are less afraid of taking risks than their millennial counterparts.
Why are so many retirees starting businesses after retirement? In addition to mounting financial needs, older entrepreneurs possess critical skills to make self-employment a success: discipline, supervisory experience, a vast network of talented resources, and the ability to tap into capital.
Not only do these battle-tested workers have what it takes, they also desire the flexibility unavailable to them when in their full-time positions. MBO Partners reports that in 2016, entrepreneurs over the age of 52 made up 33% of the independent workforce.
Are you considering starting a business after 50? Here are some growing industries (and compliance matters) to consider before diving in.
About the Industry
Entrepreneurship draws people of all ages with the allure of a “freedom lifestyle” that allows you to work with minimal overhead. Even though it sounds too good to be true, both consulting and coaching come close to fulfilling this promise.
Consultants primarily work with businesses on business-related matters, while coaches usually work with individuals on their business or personal issues. The Small Business Administration offers some practical tips for fifty-somethings (and older Americans) when starting their own consulting business. (See 8 Steps for Becoming a Consultant at 50+)
Because boomers have extensive life and work experience, consulting is a great fit.
Many consultants choose to start out as sole proprietors or partnerships because it is the simplest way to do business, and make a quick exit if they decide that the job isn’t right for them.
However, it may be wise to choose a business structure that protects you from being personally liable for unforeseen issues. If your business is in an industry that is heavily regulated, you will have more legal structures available to you.
Though most consulting and coaching gigs are usually not physically dangerous, personal liability issues are a possibility, including -
While it’s impossible to know when these issues will appear, structuring your business as an LLC will protect you personally.
About the Industry
The greatest advantage of franchising is that you don’t have to start a business from scratch. You will, however, need to invest your own money or raise a significant amount of capital to get started.
The other advantages of starting a franchise are numerous, including:
While the initial investment may produce sticker shock in even the wealthiest of retirees, a plethora of financing options are available for potential franchisees. Because these businesses already have a working system in place, banks and the Small Business Administration are less worried about the risk of outlaying so much capital to a new business owner.
Because franchising is much more complex than other industries, compliance is more difficult to manage, but not impossible.
Pay careful attention to your business structure, as your franchise agreement may dictate the type of business under which you can operate.
Compliance is a multifaceted part of your franchising business. Not only are there legal and regulatory requirements that need attention, but you’ll also have to follow a detailed franchise agreement.
Depending on the individual franchise, there may be some breathing room for you to operate your business the way you choose. But because franchises are extremely protective of their brand and reputation, there are some requirements you cannot avoid.
Other matters may include:
Your contractual obligations may also dictate how and when to address these and other compliance issues.
About the Industry
The digital mom-and-pop shop operates in a similar manner but without the physical constraints of brick and mortar. Ridiculously low start-up costs mean you don’t need to dip into savings or borrow money to get started. Work hours are flexible, and the ability to target the right customers for your product makes the risk relatively low as well.
Traditional retail businesses are forced to cater to the local market. Online sellers can pursue their passion and find the right customer from down the street or across the globe. Mega sales sites like Etsy have a built-in customer base, saving your business time and money on traditional traffic building strategies, such as search engine optimization (SEO) and paid search.
While savvy business owners will adjust their product to better meet the needs of their customers, they will find the freedom to pursue their passion without the expense inherent in other types of businesses.
Selling your products as a faceless entity or hobbyist online doesn’t protect you from compliance issues. The barrier to entering an online retail business is almost non-existent. However, you still need to obtain the proper state and/or local licenses and permits.
About the Industry
Active retirees in good health may want to take advantage of their physical fitness by starting a service-based business. Dog walking, house cleaning, and handyman services provide a physical outlet for retirees who spent most of their working lives behind a desk.
Service-based businesses don’t have to involve manual labor. Tutoring, pet sitting, patient advocacy and a variety of other ideas are available to those don’t enjoy getting their exercise on the job.
Business licenses and permits are still required. A legal business structure should be considered, since you may be personally liable for other people’s property or pets if there is an issue.
No matter what type of business you decide to start, don’t overlook the compliance piece of the entrepreneurship puzzle. Even if you consider your business something you do for fun, your state and the IRS may not see it the same way as you. Start your second career (or lifelong hobby) BEFORE an issue arises.
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