If you’re retired but thinking about getting back into the working world by starting a part-time business, there are some potential pitfalls to steer clear of.
Forbes reported there are five mistakes you should avoid making when starting a part-time business while withdrawing from full-time working life — no matter what exactly the new venture is.
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Not researching a solid plan
Jeff Williams, CEO and chief coach of Biz Starters, told the HuffPost that part of the plan involves how you'll find customers.
“Are they on mailing lists? On the Internet? In industrial listings? This is usually the most difficult part for people, because if you previously worked for a corporation, the corporation brought you the customers,” he said. “Now you must go out and find them.”
Forbes reported research should involve learning about the regulations surrounding your company.
“Regulations and certifications of industries differ by state. For example, it might be required that production is done in a commercial kitchen if you are cooking food,” Kimberly A. Eddleston, a Northeastern University entrepreneurship professor and a senior editor on the EIX Editorial Board, told the business magazine.
It’s vital to have an early idea about the size of your company. But part-time business owners should also anticipate that as customer needs and interests change, the business plan should, too.
“What I’ve learned is that you always have to think of what’s next, because things change,” Lynn Zuckerman Gray, founder and CEO of Campus Scout, told Forbes.
Skipping retaining a devil’s advocate
Part-time business owners need to have an advisor on hand who will challenge their plans to test their strength.
“You need an adviser who can really play devil’s advocate and look at your costs and profits to see whether your business idea is working. Advisers will ask the hard questions, like, ‘Is there a cheaper way to see if something can work?’” David Deeds, Schulze professor of entrepreneurship at the University of St. Thomas and EIX executive editor, told Forbes.
Such advisers don’t have to be experts, either, according to Deeds. They could be a neighbor or pal who will agree to regularly meet with you to talk bout your company goals.
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Not keeping a financial divide
Eddleston told Forbes people should “be very careful about tapping into a mortgage or retirement income to start your new business.”
Additionally, Bryan Bibbo, a financial fiduciary with the advisory firm The JL Smith Group in Avon, Ohio, told US News Money "you do not want to pull more than 5% of your retirement assets" for your business.
Still, maintaining a boundary between personal and business finances doesn’t have to be difficult. Eddleston told Forbes it could be as simple as having a separate business credit card. That additional line of credit or a small business loan is what US News Money said people who need extra money can look into as a resource.
Being unrealistic about generating revenue
Nancy Clarke provides management consulting for nonprofits through her home-based firm, Embury Consulting in Ocean Grove, N.J. She told Forbes that retirement entrepreneurs shouldn't expect to see immediate revenue generation.
“If you take the day off, that's a day you're not marketing your company,” she said.
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US News Money also reported that it may take some trial and error to see what works.
"Understand that this whole journey to an encore career is not going to be a linear thing," Marci Alboher, author of "The Encore Career Handbook" and vice president of Encore.org told the website. "Let yourself take some rides and try stuff."
Failing to do necessary market testing
It’s important to get a solid idea of how your business will be received before making a complete commitment.
"Who are my customers and do I have a product or service that they want and are willing to pay for in an amount that my sales will be greater than my expenses?" Michael Chodos, associate administrator for entrepreneurial development with the United States' Small Business Administration told the HuffPost.
“Until you have a really solid sense of how your business will succeed, you need to keep answering those questions,” he added, “Research, analysis, and testing beforehand is heading you down the path to getting it right.”
As Deed told Forbes, "You're going to get it wrong. Do small experiments and get feedback."
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