Wednesday, July 7, 2010

Profitable Pursuits of the Almost Retired

The old paradigm went something like this. "Work for the same company for 30 years. Retire at 65 with a pension. Play golf."

The new paradigm works something like this. "Work for 4-5 different companies as you climb the corporate ladder. Get laid off at 55 with 200,000 in your 401k. Now what?"

As companies have been cutting costs to weather the recession, the experienced employee has taken the hardest hit. Fifty something's are being replaced by twenty something's who will work for half their salary.

Middle management jobs are going away, possibly never to return again. With no pension and insufficient funds to retire to the golf course, many capable and experienced managers are moving to entrepreneurism as their retirement plan.

During the dot com bubble of the 90's, it seemed 25 was the age to start a business. A recent Kaufman Institute study showed that the age at which entrepreneurs start new businesses was steadily rising. Entrepreneurism, once thought the pursuit of the young and energetic, is fast becoming the pastime of the wise and experienced.

An experienced manager (age 55) can start as an owner/operator of a service business. After a few years establishing the business, he can easily transition to an owner/manager. He can keep busy, but at a slower pace and enjoy a semi-retirement status well into his seventies.

There are two key advantages inherent in the older entrepreneur.

1 - Experience. Older entrepreneurs have been around the block a few times. After years of management meetings, they know how to plan and budget. They know the importance of setting obtainable goals and measuring accomplishment. They can handle people and are unafraid to hire and, when necessary, fire. They don't fall for every slick sales pitch that comes through the door and can smell a rotten egg when it is standing in front of them.

2 - Network. Older entrepreneurs have connections. A recent Kaufman Institute survey of successful business owners showed that they ranked personal and business network connections as important as access to capital financing when starting a new business. If you are starting a service business and know people in a dozen area companies who could use your service, you are off to a good start.

Many excellent business models lend themselves to the older entrepreneur. Business consulting, coaching and training allow the entrepreneur to take advantage of their years of experience and share it with others.

Direct marketing businesses take advantage of the entrepreneurs vast network of professionals acquired over time. Other business models such as mobile food service vending at events allows the entrepreneur to travel extensively.

More and more professionals are finding the capital to start their new business venture in the IRA or 401k. For most, their 401k is not enough to retire on. It is, however, enough to start a new business.

Some accounting firms specialize in rolling over 401k's into a business investment that can provide an income well into retirement. It is a special provision of the ERISA law that is too involved to go into here, but it is entirely legal and increasingly popular.

Whatever your age, going into business for yourself takes careful thought and planning. It is helpful to take stock of your key asset, yourself. What are you interests, goals, and investment capital?

Do you want to work from home or would you rather have an office? What business model would fit your personality? A thorough assessment, reviewed by a small business consultant can help you get on the right track.

Finally, ask yourself, "Do I have the courage to act? Individuals who have worked in a job for 20 or 30 years may find entrepreneurship a daunting possibility. Not everyone is cut out to be an entrepreneur, but utilizing the experience and network of the older entrepreneur can be fun and profitable.

By : Ed_Wills

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