The economy, job loss and increased competition for promotions and new jobs have all contributed to the trend of older people (55+) making the decision to start a business.
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Older entrepreneurs have the advantages of time and experience on their side when it comes to starting a new business. But on the other hand, they may face a wide variety of challenges, including higher technological learning curves to use popular social media sites. (e.g., Facebook, Twitter, LinkedIn, Plaxo).
Older folks might lack experience as a business owner and it normally takes three-to-five-years before the business is generating sufficient funds to provide potential entrepreneurs with a “market rate” salary.
Older people tend to have more access to money through savings, retirement funds and severance packages that will help get their business off the ground and tend to have fewer demands if the house is paid off and the kids are out of school. They may also have a working spouse who can cover daily living expenses.
For the current corporate workers, the time to begin the transition is while you still have funds and, when possible, before you quit your day job.
If you are approaching your senior years and are thinking about staring your own business, ask yourself these questions before you leave your day job:
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- Make decisions on what type of business you want to start, including products / services and location;
- Investigate your options for starting the business;
- Consider a second job or volunteer to get experience;
- Learn business basics like accounting and using spreadsheets and other software;
- Write a business plan.
The biggest start-up mistake is not having a plan, or worse, having an overly-optimistic one. Don’t underestimate the cost and effort that goes into establishing a business. Be realistic. Success is built over time; how much time (and money) depends upon how you intend to go into business.
A franchise has a bigger upfront and on-going cost, for example, than a home-based business with a web site, phone and computer. Expect the first three to five years to be lean ones; those are the years to establish credibility, capacity and visibility.
The best time to quit is when you have your plan in hand, with answers to these key questions:
- What am I selling?
- How do I know this is a good idea?
- Who is my customer and how will they find me (or will I find them)?
- What do I need to start the business (e.g., computer, phone, Internet access)?
- How much money do I have?
- How much time can I devote?
- What am I willing to sacrifice while I’m building the business (e.g., vacations, time with family, buying a new car)?
There are risks to starting a business. For example, you may have a great idea, but it doesn’t necessarily make for a great business. You may have a great idea and a business, but lots of competition. If you need to borrow money, a personal guarantee of that debt will be expected.
However, the rewards include the sense of accomplishment when you get your first customer, produce your first profit and really grow the business. The rewards also include the financial value and profits of the business, as well as the freedom to create an environment that works for you, with flexibility to set your schedules and do business your way.
Older can be wiser when you decide to start a business. There will be no “ideal” time when everything is perfect, so pick a good time when you have realistic objectives and perspectives on what it will take. And one more point: Whether starting a business when you are young or old, you will make mistakes. They are painful, but rarely fatal to your business.
Lea A. Strickland, MBA CMA CFM CBM is the author of Out of the Cubicle and Into Business, a book for people making the transition from corporate worker to business owner. She is also an internationally recognized consultant on entrepreneurial issues including start-up, funding, business plans and running a business. Lea is also the President/CEO/Founder of F.O.C.U.S. Resources based in the Research Triangle Park Region of North Carolina. F.O.C.U.S. Resources provides consulting services to entrepreneurial companies and established corporations. For more information visit www.focusresourcesinc.com