Older Americans are quickly becoming this country’s newest entrepreneurs. The United States Department of Labor reports that 7.4 million baby boomers are newly self-employed. This figure is expected to climb, as more people will retire from one job to start a new one. Others may lose their jobs, and yet some will search for the flexibility and independence that being self-employed can bring. Robert Litan, vice president for research and policy at the Kauffman Foundation in Kansas City, MO states that he believes that over the next ten years, there will be an increase of fifty, and sixty-five year olds who will join the ranks of the self-employed.
The question arises as to whether it is wise to start up a new business at midlife. The whole situation can be an eye opener. What may start out as a kind of hobby job, may prove to be overwhelming or cause burn out in just a few years. The Small Business Administration reports that sixty-six percent of all new businesses do survive after the first two years. After that, forty-four percent survive after the first four years. Older Americans who finance their new business with their retirement funds or savings, will find it extremely difficult to recover the financial loss if the business goes belly up.
It is suggested that older Americans ask themselves how much of their retirement fund or savings are they willing to risk trying to increase their income in their later years. Another question would be investors need to ask of themselves is how much time are they willing to invest in their new enterprise. Starting their own business can also consume a lot of their time, energy, and stamina.
Experts offer a compromising solution for those not quite sure of how deep they want to dig into their savings, but still want some kind of self-employment. Invest in a fairly low-end business that has already been established, and is known to have a good track record. In this way you can examine the company’s financial records, making sure it has a positive cash flow with room for growth if needed. Sometimes new owners may just be what an existing business needs. Fresh ideas, along with motivation may give that business a brand new start. Especially if the previous owners were suffering from burn out.
Buying a franchise is another option. You can benefit from the corporate training and support. However, there are some drawbacks. These may include franchise fees, royalties, and rules that may include only certain products can be used or sold. Therefore, the profit may not be as much as hoped.
The important thing to remember before starting your new venture is to do some thorough investigating about the laws and everything else that will be involved in your new venture. Also, do some very deep soul searching before making a final commitment. Do you really have what it takes?