Most people look forward to retirement, viewing it as a time of relaxation, freedom, and fun. Finally, I’ll be able to do what I want, they think. No boss breathing down my neck; no need to get up at a certain time; no stress. And for the first few weeks or months, retirement lives up to the hype. But to their surprise, many retirees soon find themselves pining for something to do. They get bored and lonely. They miss feeling challenged and purposeful. Often, too, they’re constrained by a tight budget. And before long they find themselves wondering, Now why did I think retirement was such a good idea, again?
If you’re experiencing the retirement blues yourself, you may want to start your own small business. It’s a great way to stay busy and keep your mind active during retirement. It’s also a great way to supplement your retirement income, pay for that condo on the beach or country club membership you’ve always wanted, or put some extra money away for the grandkids.
With decades of work experience under their belts, many retirees are in a perfect position to become successful entrepreneurs. And the best part? Starting your own business won’t take up all of your time. In fact, with just 20 hours a week of organized and focused time, you can build a solid foundation for small-business success. The rest of the time is yours to garden, golf, read, socialize… whatever.
It’s easier than ever before to launch your own business. Thanks to Internet-based tools, virtual secretaries, and answering services, you can reach and service many potential customers without ever leaving your house—not to mention the 24/7 access to educational tools and the ability to instantly search for answers to your questions. If you’re ready to start Round Two of your professional life, read on for my top ten rules of business for retirees:
Figure out your field… Perhaps you already have a clearly defined vision for your business: You’d like to uplevel your erstwhile hobby and design, make, and sell original pottery, or you’d like to use your background in accountancy to start your own tax service. However, it’s very possible that you’re one of many retirees who aren’t sure which field to go into. (Anything but the job I just did for 40 years! you think.) In that case, I recommend starting a service business (anything from home cleaning to tutoring to adult care) for the following reasons:
- They require minimal money to start. I’ve never started a service business with more than $10k, and many with less than $3k—including businesses that have made me millions!
- Many service businesses don’t require a prior work history in the field or particular qualifications.
- In most cases, they can’t be outsourced or performed by computers, so you’ll always have work.
- Service businesses are a great source of passive income because you can hire others to perform the actual work while you handle the key behind-the-scenes management tasks (like hiring, supervising, taking client calls, marketing, etc.). For instance, I started a mobile car detailing business in my 20s. I hired an employee to do the work, charged $95 for a full detail inside and out, and gave my worker 50 percent. All I did was make the phone ring and schedule the jobs. I didn’t get rich, but I did make an extra $25k a year—not bad for three to five hours of work a week during my down time!
…but do your homework before making it official. Once you’ve familiarized yourself with the possibilities and identified a few types of businesses that might be needed in your area, try to poll at least 50 people to see which services they would use in the next six months and if they’d pay the price you would charge. Their answers will give you a good idea of which field you should go into.
Also, before pulling the trigger on your business, take time to research the licenses, permits and certifications you may need for the industry you’re entering, and make sure that obtaining them won’t be prohibitive. You can usually find the information you need at your local business tax office or by contacting your Chamber of Commerce. And take it from the voice of experience: Start filling out that paperwork early. Government bureaucracies can be painfully slow!
Make “home sweet home” your “office ‘suite’ office.” Odds are, you’ll be starting your new business from home—a place that’s full of distractions ranging from laundry baskets to televisions. That’s why setting up a dedicated workspace is crucial for productivity. Depending on your home’s layout and your personal preferences, you might be able to use a spare bedroom, a basement, a detached garage, or even a nook in the living room as your “office.”
Personally, I converted our dining room into an incredible home office. I was able to do this on a dime because the room was already equipped with a large but seldom-used table. If you go this route, you might want to add a file cabinet and swap the chandelier for recessed or track lighting. As I found out, it’s hard to tap into your entrepreneur mojo when you’re constantly ducking a chandelier!
Also, if you set up a home office, don’t forget to capitalize on tax deduction advantages. For example, if you set aside a separate room of your house in which to conduct your business and/or store products, you may be able to take a home office deduction. You can also write off transportation expenses to and from your home to your business appointments and, in some cases, expenses related to car maintenance and repair.
Create a dream board to keep up your motivation. While you’re still in the planning stages, set aside an hour to tap into your creative side. Envision your goals for your business: what you’ll make or sell, who your customers will be, and—most importantly—how being an entrepreneur will positively impact your retirement. Then glue images, possibly a photo of that condo or country club brochure, and words that remind you of those things to a piece of cardboard or poster board, and make sure the dream board is visible in your workspace.
Dream boards may seem small, but they’re very important. On those inevitable days when you think you must be crazy for starting a business after finally exiting the workforce, looking at photos of the vacation destination you want to visit, the logo of the college your grandchild will attend, or your debt-reduction schedule will motivate you and remind you why you became an entrepreneur in the first place.
Don’t underprice yourself. When you’re just starting out, you may be tempted to offer rock-bottom prices for your goods or services. After all, you don’t want to alienate potential customers by charging too much… and isn’t underselling the competition a reliable strategy? Well, maybe—but that’s not the way to make a profit. Especially when you’re just starting out, you can’t be in the business of offering mega-discounts. If you recoup only enough money to pay labor and operating costs, you may be helping to feed your employee(s)’ family, but not your own.
Underpricing is without a doubt the biggest mistake new business owners make. Often, the urge to undercut the competition is just too great, but doing so can quickly hurt your business. What you need to do first is figure out all your costs and what you want to make, and then use that information to determine the price. After determining what you need to charge to make what you set out to make, you may find the business you chose does not work. There are also many ways to add value to your services that will allow you to charge more if you have done your homework identifying what your competition fails to offer.
Make room for a marketing budget. One of the biggest mistakes new business owners make is not including a marketing budget in their operating costs. In a nutshell, this is the money you invest every week or month to tell your community why they need your product or service and why your company is the one they should choose.
If you do not reach and retain customers, you won’t be in business—you’ll be bankrupt. First, figure out what makes your business unique: what it offers, why people need your product or service, and why consumers should choose your company over any other. This is called your ‘unique selling proposition.’ Use all or part of it to create taglines, logos, marketing messages, etc. that will enable you to advertise through websites, social media, newspapers, fliers, etc. Then do a little research to estimate how much these types of advertising might cost so that you can budget for them.
Hire smart. If your business will need one or more employees other than yourself (this is especially likely if you’re starting a service business), be aware that how and whom you hire will affect how successful your business is. Before you even think about placing your first employment ads, get familiar with federal, state, and local labor laws (these cover areas like hiring discrimination, child labor, independent contractors, immigration law, and more). Don’t worry; you don’t need to navigate these areas on your own. If you become a member of the National Federation of Independent Business (NFIB), you’ll have free access to its labor law hotline. You can also consult with an attorney.
Once you’re familiar with all applicable hiring laws, it’s time to get the ball rolling. I recommend making sure that you can get the labor you need before you officially open your doors by running test ads. If you don’t get five applicants within three days, you might want to rethink which field you’re going into, because you want a business that is effortless to hire for. At this stage, if you like, you can hire respondents as subcontractors (not official employees) who work when you have jobs for them—after thoroughly vetting them, of course. Once your business becomes more popular, you can consider hiring your subcontractors full-time.
When you do reach the full-time hiring stage, be sure to look for talented, smart, experienced, and competent people with integrity. Don’t automatically hire friends and family members because it’s convenient! Remember, experience, competence, and commitment are invaluable assets.
Buy some online real estate. Many would-be small business owners (especially those who plan to do all of their business locally) figure that traditional print or radio advertising will be enough to spread the word about their companies. That’s archaic thinking. Since most of your prospective customers—even those born during the heyday of newspaper and radio—are surfing the Internet, websites are no longer optional.
Developing an online presence is as essential as having a business card. At minimum, you need a homepage that functions as a business storefront, conveying your unique selling proposition, pricing, and contact information—though sections for customer testimonials, employee bios, and photos don’t hurt! Check out the competition’s websites to see what works and what doesn’t. If you can’t afford to hire a website designer, check into the growing number of DIY systems that allow you to plug your specific information into cheap built-in templates.
Focus on providing great service. After your business opens its doors, it will develop a reputation. Whether it’s a good or bad one is largely up to you. To make sure that customers hold your company in high esteem, focus on providing great service to each and every customer from day one. Word of mouth is important for the growth of any business and providing those little extra touches will get people talking about you in a positive way.
Let’s use a lawn mowing company as an example. To show that you do the little things that big companies won’t, you decide your employees will pick weeds out of flowerbeds for no extra charge. In this scenario, I would recommend giving employees a postcard printed with two boxes (labeled ‘lawn mowed’ and ‘flowerbeds weeded’) for each visit. At the end of the job, employees check each box and leave the card with the customer. Not only does this make sure your employee does the work—it also shows the customer how important this ‘extra’ weeding service is to you.
Another aspect of providing great service is putting quality control measures in place. In other words, make sure your customers get what they pay for. Be prepared to listen to the occasional complaint and to rectify the problem. It’s also a good idea to periodically survey customers to make sure that they’re satisfied with the goods or services you’re providing and to see if they have any ideas for how you can improve.
Use your time wisely. Good time management is an important skill for any entrepreneur to have, but it’s especially crucial for retirees who don’t want to go back to a full-time work schedule. If you aren’t purposeful and efficient, your responsibilities will bleed over the 20 hours a week you’ve allocated to run your business…and soon your business will be running your retirement!
Whenever possible, I recommend planning each day the night before. Write down all of the things—family and business related—that you’d like to do the next day. Then, mark each one with an A, B, or C. As are tasks that must be done. Bs should be done, and Cs would be nice to get around to. This system will help ensure that you’re spending your time on high-value activities instead of reactively chasing every shiny ball that rolls by.
While these rules don’t cover every step of creating your own business as a retiree, they will help you to head in the right direction. So stop procrastinating. If you have a good idea for a business, want to stay busy, or want to start earning more money, there’s no time like the present to begin Round Two of your professional life. Odds are, you’ll wonder why you didn’t retire sooner!
Sean C. Castrina is a business coach, entrepreneur and author of 8 Unbreakable Rules for Business Start-Up Success and the soon-to-be-released 8 Unbreakable Rules for Small Business Dominance. For more information, visit newbizcoach.org.