That dream of a business of your own? Now’s a great time to make it a reality. Rafts of research show that older founders are more successful than those young guns getting all the press.
Whether you’ve figured out the next killer app or are ready to turn your felting hobby into a business, there are some key considerations you want to factor in before taking the plunge, including:
- What you want from the venture
- Whether the business idea is financially viable
- What capital do you need
- Who can advise you
1. What do I want from the business?
The best place to start is to determine what you want from the business, notes LA-based founder and CEO coach Jill James.
“Be intentional about how the business fits into your life,” counsels James, herself a founder and CEO. “Unlike the start-up founders you read about, you’re not going to be working 80 hours a week, living off pizza and couch surfing — you have an established life. And that’s terrible for your health at any age anyway. You can build a healthy business in a few hours or days per week, and that is totally okay. Build a business that works for you and that you want to run.”
It’s also wise to think about what you want – and can risk – financially.
“At 50-plus, the thought of what retirement is going to look like should have entered your mind,” says Aristotle Makris, CPA, CFP®, a tax advisor in The Planning Center in Chicago. “It’s important to assess the risks associated with your new venture. If things go wrong, what are you willing to lose? And at what point is your retirement at risk?”
2. Is my business idea financially viable?
“The number one failure point I see with my new clients is their most popular products and services are unprofitable,” James laments. “With every sale, they’re working harder and digging a deeper hole!”
That’s why she suggests doing a business plan. You can do a traditional business plan, a simpler lean business plan, or simply describe:
- What you want to offer
- Who you want to sell it to
- What you want to charge
- How much it costs to make and deliver
- What’s left to pay yourself and your business expenses
“Balance the time you spend on your idea with actually talking to people, learning what they need, and building your relationships,” James says. “Listen and ask questions, make useful stuff that people want, and sell it at a profit. That’s still a great business plan.” And if the plan doesn’t add up? “Keep working on your idea. There’s always a version of your business that works financially.”
| Pro Tip: Makris, a former business owner himself, says it’s vital to consider the entire life cycle of your business. “You need to build your exit strategy to help you navigate your transition to retirement,” he asserts, “whether it means selling, merging, or simply shutting the business down.” |
3. Who can advise me?
Of course, answering all those questions about your idea might make your head spin That’s why it’s important to get professional advice. Start with your network but be open-minded about making new connections specifically to help you get your venture off the ground.
“You may know a lot of people who work with large companies, and they may not be the right advisors for you in this phase of business,” James explains. “Consult with your tax accountant, financial advisor, insurance broker, banker, family attorney, or other trusted advisors to find out if they like working with new businesses. If it’s not their thing, ask them for referrals to people who like to give advice to new businesses.”
Makris concurs. “Surround yourself with trusted advisors that can help you navigate the areas that are not your expertise,” he advises. “After all, you’re starting this business because you have a product or service that you believe in. You don’t want to be bogged down thinking about issues that take away from providing a great experience to your clients or customers. You benefit from the advice and guidance they can offer, and…leverage their relationships to help create plans and processes.”
| Pro Tip: You can get free advice from your local Small Business Administration office, the Small Business Technology Development Center, and other local, state, and federal government organizations. Local institutions of higher education may also offer free or low-cost entrepreneurial support. |
4. What capital do I need?
Most of us won’t need a huge influx of cash to launch our enterprises, but we will need enough funding to cover:
- Initial or startup costs, those expenses related to getting the business up and running, like equipment or materials, licenses, and permits, staff, legal fees, marketing, inventory, marketing, etc.
- Operating costs, which include everything you required to actually run the business day to day.
Even if you can cover these costs yourself, it makes sense to talk to financial experts to discover the most appropriate and advantageous ways to fund your business.
| Pro Tip: Resist the temptation to raid your retirement account to bootstrap your new venture. “First, you created these accounts to provide money to get you through the critical years of retirement, and second, it will be your most expensive form of financing,” Makris cautions. “Pulling money out of a traditional IRA or 401(K) account will trigger taxable income at rates up to 37% currently, plus state taxes, depending on the state you live in. There also are a slew of potential other tax consequences.” |
What are you waiting for? Use this information to take the first steps toward making your idea a reality.
“Get started!” James encourages. “You have a unique point of view and a set of experiences to bring to the world.”
Disclaimer: This information is not intended as a substitute for professional financial, accounting, tax, or legal consultation; it is provided “as is” without any representations or warranties, express or implied. Always consult professionals when you have specific questions about any financial matter.
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