If you thought retirement was going to be Utopia and learned it was boredom, you don't have to keep sitting there doing nothing
Consider starting a new small business, advises Sean C. Castrina, author of Unbreakable Rules for Business Start-Up Success.
"It's a great way to stay busy and keep your mind active during retirement," confirms Castrina, "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," says Castrina. "The rest of the time is yours to garden, golf, read, socialize...whatever."
Here are his tips for doing that:
Figure out your field... Perhaps you already have a clearly defined vision for your business: You'd like to up level 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, Castrina recommends 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!" he comments.
• 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.
• Since 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.), service businesses are a great source of passive income.
...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.
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," Castrina shares. "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," Castrina adds. "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."
Don't under price 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.
"Under pricing is without a doubt the biggest mistake new business owners make," says Castrina. "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," Castrina warns. "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."
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, according to Castrina. 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.
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 good way.