An encore entrepreneur is a person who starts a new business or venture after age 55. They represent more than half of all business owners in the U.S., and for a good reason.1 These entrepreneurs have decades of work and life experience that may make them especially well-suited to navigating the often stressful and high-stakes world of business ownership.
If you hope to retire soon but are unsure of what your “second act” might look like, encore entrepreneurship may be a way to earn some income while challenging yourself and perhaps mentoring others. Here are things to consider to help prepare for encore entrepreneurship.
Advantages of Encore Entrepreneurship
Although entrepreneurship may seem to be a young person’s effort, those in their 50s and older may have an advantage with what they might bring to a new business.
Personal Income May Not Be the Only Goal
Those who retired from a career may already have more than one income source, such as withdrawals from a 401(k) or an individual retirement account (IRA), Social Security benefits, pension payments, or rental real estate.
Because of this financial cushion, entrepreneurship after age 55 is not always motivated by personal income. Instead, encore entrepreneurs may want to make services more accessible to a wider range of people, build a business that they might pass along to family members, or pursue a lifelong passion.
Flexibility is Key
Encore entrepreneurs may have more flexibility in their business pursuits than younger entrepreneurs. Younger entrepreneurs may have student loans, need to raise young children, or put aside funds for retirement. The flexibility of encore entrepreneurs may allow them to take advantage of opportunities that would not be possible for those who are a few years younger.
With Age May Come Wisdom
Some older adults in their 50s and 60s may experience age discrimination in the workforce. However, this discrimination may come from nothing more than the perception of younger workers as lower-cost labor. This fallacy ignores the possibility of some older workers having wisdom, pragmatism, and useful connections from spending decades in the workforce. These traits of older entrepreneurs may play a valuable role in launching a new business.
Getting Started as an Encore Entrepreneur
While setting the stage for encore entrepreneurship, preparation is key.
Here are some steps to consider:
1. Evaluate your market. Every business is different, but all have one thing in common—if you do not have a solid understanding of your target market, it may be tough to gain a foothold among your competitors. By carefully evaluating potential targeted customers or clients and what they are looking for, you may focus your marketing and advertising efforts on those most likely to patronize your business.
2. Identify your funding and income streams. It is a good idea to predict several years into the future after your launch to know your financial needs and income sources. Are your finances strong enough to afford to run your business at a loss for months, even years? By having a best-case estimate and a worst-case scenario, you can prepare for any financial challenges that may arise for the first few years of your business.
3. Take classes. From business incorporation to tax preparation, entrepreneurship involves many knowledge areas. You may not know all aspects of every business sector. By taking a few courses at a local community college or online, you may gain an understanding of things that you do not know. For example, you may learn up-to-date facets of incorporation, regulations, and tax planning. This knowledge may be helpful even if you ultimately delegate these tasks to an attorney, accountant, or financial professional.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05255895