Business After 50 Blog

You Owe It To Yourself

As I do from time to time, I spoke yesterday at a local job club about my "10 Keys To Starting a Great Business After 50".

I didn't ask (it would be impolite) but i'm guessing that all of the 25+ attendees were at least 45-years old.

And for some this may be the first time in 15 years or longer that they have had to sweat through writing a new resume and hit the street looking for job interviews.

I started off by emphasizing one of my most strongly held beliefs - that any time you find yourself out of the corporate world after age 40 and after age 50 even if you still hold down a corporate position, you owe it to having your best possible future life to seriously examine the entrepreneurial life.

The typical corporate employer has a whole section of their HR department devoted to one task - prepare to lay off people the next time the company has even a slight financial downturn.

They have a plan to get rid of 40+ managers - what plan do you have if they do it to you?

For many years,  a sufficient "plan" was to brush off your resume every few years, ready to start calling everyone you know in your industry if they handed you the pink slip (today it's more likely to be e-mailed to you!).

But today you have whole industries imploding - by the end of 2008 more than 30,000 white collar managers will no longer work for Ford, GM, and Chrysler and (this is the key point) THEY WILL NEVER WORK IN THE AUTOMOBILE MANUFACTURING INDUSTRY AGAIN!

No matter how talented they are at their jobs. No matter how many "superior performance ratings they received over the years - these people need to find a completely new line of work.

Your corporate employer plans ahead to get rid of you, why don't you take some time to plan an alternative work path for yourself.

If you do, you will quickly realize that despite some level of financial risk, you will almost never enjoy as much flexbiility in your schedule, freedom to pursue new ideas and unfettered growth in your income in any corporate job as you will being your own boss.

So, you owe it to your preferred future of work to seriously take a look at what kind of entrepreneurial venture can provide the satisfaction and reward you seek from your work.

Small Business Owners Are The Lifeblood of Charities

A couple of nights ago I attended an organizational meeting for raising funds for a non-profit group operating in my town that provides housing and training for economically-challenged families with children.

As I listened to each member of the group introduce themselves, it dawned on me that the majority of them are self-employed business owners, just like me.

Among the volunteers are a local independent insurance agent, the owner of the local UPS store, a marketing consultant and several other small business owners.

Why am I discussing this topic in today's blog?

Because I bet that the make-up of my volunteer charity group is fairly common across the U.S.

Small business entrepreneurs not only provide virtually all job growth today in the U.S., but they also are much more active in charity and volunteer work than their corporate brethren.

I remember that as a corporate manager I was working 60+ hours per week, including my 2-hour roundtrip commute each workday. I rarely made it home before 7 pm and then if I wanted to attend a charity or volunteer group meeting, I had to rush to change my clothes, eat and make the meeting.

So, naturally over time I withdrew from most of my charity work and I like to think that my community was the worse for not having my involvement in such activities.

One of the wonderful opportunities you will enjoy as a 50+ Boomer entrepreneur is that you too will now have the flexibility of schedule to support whatever charity and/or volunteer work you choose.

Not only will your small business management experience be very valuable to your charity group, but your availability during the daytime and evening hours will set you apart from most of your friends who continue to slave away in the corporate world.

It's A Big Circle for Boomer Entrepreneurs

When I first talk with a prospective 50+ business owner, one of the most common comments I hear is that even though they are often burned out emotionally from the demands of being a corporate manager for thirty years or more, they just don't have full confidence yet that they can find the level of work satisfaction and reward they are looking for at this point in their lives in running their own business.

In answer to their concerns, I bring up a life experience that is very common to many of us who are 50 and over - we were teenage entrepreneurs (although we didn't have the slightest idea what that word meant). I don't how it worked in your household, but throughout my whole childhood into my teenage years my weekly allowance was just $1 and that amount was granted only after I completed a list of weekly chores (plus the ones of my older brother he bribed me to do).

I usually received a birthday check for $10 from my grandma and as I got older my out-of-town relatives would send me a Christmas check.

But, by and large if I wanted to make a purchase that exceeded my accumulated allowance, I had to work to produce the money.

I was a bit of a shy kid, so it wasn't all that easy to solicit jobs from my neighbors but my burning desire to have the latest toy or a new pair of baseball shoes highly motivated me.

During the summer when I turned 10 (my birthday is in the middle of July - I'll be 60 this July), what had been a few lawns I mowed on my street exploded into a full-blown lawn service company, when as the result of my grandma's promotion among her bridge club ladies, I suddenly had 40 lawns to cut each week!

To this day, I remember the sense of pride I took doing the work just right and how I ended up with more than $2,000 in my bank account by summers end!

In fact, thoughout my 18 year corporate career whenever the going got rough (more often than I would have liked), my thoughts would return to my experience as a 10-year "entrepreneur".

When I finally stepped out of the corporate world at age 40 to start my first company, I was powered by the confidence that comes from having done the entrepreneurial thing before.

I bet that if you think about it, you'll realize also that by becoming a Boomer entrepreneur, you are  "closing the circle of your life" as far as being entrepreneurial.

5 Reasons Why It's So Attractive To Run Your 50+ Business From Home

It is estimated that more than 35 million Americans work full-time or part-time from a home office.

A good proportion of these people, maybe as high as 40%, are self-employed running their own businesses.

Why is the thought of establishing your business in a home office so attractive?

Let’s take a look at five significant advantages to locating your business at home.

1. You can save thousands of dollars in expenses paid for an outside space.

In many metropolitan areas, rents for decent office space run $12 per square foot and up. Rent for a retail store in a typical strip mall often starts at $18 per square foot ($1500 per month), and this figure doesn’t include common annual increases for the strip malls maintenance and property taxes.

When you rent outside space, you are also usually required to set up your own account with the gas and electric companies, and you may have to pay several hundred dollars to hook up a couple of phone lines.

2. You can coordinate your work and personal schedules more effectively.

When your office is only feet away from your living room or basement, you may find it much easier to accomodate the scheduling needs of your family with a flexible work schedule.

Many homebased businesses are started with the expressed intention of being able to earn money while the business owner spends more time with her children.

Even though new business owners typically work long hours each week growing their businesses, working from home can offer you a much more flexible work schedule.

3. You can enjoy "creature comforts".

A typical business office includes just a door, a set of walls and maybe a private bathroom. You can add such comfort items as a sofa, a mini-fridge and a television, but it is often not the same level of comfort you are used to from your recliner chair or spa bathtub.

You must be careful not to allow too many distractions when you work at home, but it certainly is nice to be able to take a relaxing break by sitting on your patio watching the birds and squirrels in your yard. Or by taking a brisk half-hour walk around your neighborhood (one of my favorite pastimes).

4. You have access to storage and assembly space.

A good number of homebased businesses either inventory and sell a line of products (such as Shaklee) or assemble components into a finished product (such as gift baskets), which they then sell.

For these types of businesses it is important to their productivity that they have enough open space to properly organize their inventory and/or raw materials. A large table may be necessary for assembling a craft product and it is often helpful to have a long table to pack products you are preparing to ship via UPS or the U.S. Postal Service.

It can often be quite a challenge for find an assembly-type space outside of your house that is both large enough and affordable.

5. You have a short "commute to work".

I can remember many cold winter days when I had to stand out on the commuter train platform in freezing weather waiting for an already overfilled train to pull up.

When you locate your office at home you save many hours of commuting time, which you can then invest in more productive activities, such as calling sales prospects or preparing a proposal to be sent out.

And working at home permits you greater flexibility about when you work. Some business owners with small children take a break from work from 4 pm until the kids go to bid and then they work until midnight on their companies.

And many homebased entrepreneurs fit needed business projects into unexpected chunks of time that unexpectedly appear, such as when a planned family event is cancelled.

How To Finance Your 50+ Business

Even with the most disciplined cost control and effective collection of money your business can run short of cash.  As a matter of fact, this is a fairly constant situation when you are growing your business.

To provide the capital to launch and grow three businesses over the past twenty years, two of them after I turned 50, I’ve used every one of the financing technqiues described in this blog. You benefit from my personal experience.

Finding Cash To Launch Your Business

This period includes the time from the day you crystallize your business concept through the first six-twelve months after you officially open for business.  You can look at your business during this phase as a "money sponge"–everything you do seems to require cash.

You can feel very conflicted during this period regarding your money.  You have read or been told that you need to conserve your cash in the early days of your business, and yet there seems to be so many expenditures you must make.  The key question to answer is: Can you successfully pursue your marketing strategy while keeping tight control on your available cash?  If not, you will find yourself visiting the bank for a cash advance more often than you may wish.

Sources of Start-Up Capital

Savings

The is probably the most commonly used source of start-up capital, as it should be.  Be realistic.

– why should anyone else take a financial risk on you until you have proved that you can make a profit with your own money?

The ideal scenario would be for the new business owner to have planned ahead enough that she accumulates all of the seed money she needs before she quits her job and opens for business.  The reality is that the personality type that will undertake a new business launch is also characterized by impatience.  This often leads to fudging on the amount of money you start with.

Your family’s active help can make the money go further by pitching in on necessary tasks, such as typing billing, stuffing envelopes, answering the phone, doing the bookkeeping, passing out flyers, etc.

Credit Cards

If you enjoy good personal credit, you will receive at least several offers of "cut rate" credit cards.  A common technique is to offer you a "special introductory interest rate" of between 6.5% and 8.0%. If you read the financial pages in the newspaper, you know that this rate is below the current prime rate.

So what is the catch?  The rate is usually only good for six months, at which time it typically rises to 6.5% over prime (around 15%).  Obviously if you plan to carry a significant balance more than six months, you may want to re-examine the use of these supposed special deals.

It is, however, very convenient to be able to walk into a bank and walk out with $5,000 in cash, without having to deal with a bank officer.  We recommend that you apply for at least one of these reduced-rate cards and put it away safely until you find your business in a first-year emergency or until a very certain selling opportunity comes along.

Family Loans

This source of capital is probably the second or third most-widely used source of seed money.

If you have thought out your business idea even a little you can usually approach at least one family member for a $1000-$3000 loan.  We call this "love money" because they lend it based more on their love for you than from a thorough review of your business plan. Dollar amounts above this level are more difficult to obtain without some more formal commitment, such as a promissory note. If you fall behind in paying, don’t be surprised if at Thanksgiving dinner you are approached by the lender for a "heart to heart" talk.

One key guideline to follow: Don’t borrow from a family member who can’t afford to lose the money.

Home Equity Loans

During the 1990’s, borrowing money on the equity in your house was a popular way to finance a business launch. The most important fact to remember with this type of loan is: If you default, you don’t just walk away and chalk it up to experience. The bank will be on your trail fast! They usually don’t really want to have to sell your house, so they will press you to agree to a repayment schedule, which will often require that you find a JOB very quickly.

Be aware: Apply for a home equity before you quit or lose your job, unless your spouse brings in a substantial income.

Insurance Loans

Although it is less frequent today than it was in the ’70’s and ’80’s, many people today own a type of insurance known as whole life.  This policy is a combination of life insurance and savings, as part of your premium goes into a pool which is invested by the insurance company.  After the first 3-4 years, the dollar value of the savings portion, known in insurance parlance as "cash value" starts to increase fairly dramatically.  For example, on a seven-year old $100,000 face value whole life policy, the cash value is $8,000 or more.  You have the right to borrow all of the available cash value (total value less any previous loans) at very attractive interest rates–averaging 8%. You are charged interest only, once per year. If you die before repaying, the loan amount is deducted from the death proceeds.

Barter Exchange

Barter is defined as "to trade without the exchange of money." The key to the exchange is a method for acceptably valuing each parties offer.  This is where barter exchanges come in.  These are businesses whose  business is to introduce traders to each other, establish fair dollar values and record the transaction for the IRS.

Active traders use the barter exchange’s computer to keep track of how many barter "points" they have accumulated and how many points it takes to buy certain products and services. A typical barter exchange might start with a carpet installer offering $1,000 of installed carpet in return for $1,000 in oil changes which are traded to a trucking company, for $1,000 in trucking which is then traded by the carpet installer to a printer who offers $1,000 in printing.

As a new business owner, you can create your own barter exchanges simply by approaching suppliers of goods and services you need and don’t want to pay cash for.

Informal Investment Groups

Some very successful business concepts derived their initial funding by putting together a group of private investors among the founder’s friends and acquaintances, We are personally familiar with a start-up that was funded by obtaining a $1,000 investment from each of 25 investors, all members of the same softball league, who bought shares of stock in the new corporation with the clear understanding that they could lose all of the money, but that they would enjoy some very fun stockholder meetings.

If you desire to explore this option, we suggest that you consult first with a small business attorney experienced in equity investments for new corporations.

How To Turn Your Hobby Into a Great 50+ Business

The number one ground rule that I advise my 50+ clients to set is: pick an activity for your business that you love doing.

The way some 50+ folks assure that they will be starting a business that they love is to convert a hobby into a profit-producing enterprise.

This can be an intelligent way to get started, but first you should answer some key questions.

KEY QUESTIONS TO ANSWER

It is very advisable for anyone thinking of turning a hobby into a paying business that they carefully research and consider the key skills, activities and techniques necessary to earn an attractive income from sharing their beloved past time with others.

Some key questions to ask and answer include:

1. Will you still enjoy your hobby activity if you find yourself having to work at it eight hours per day, five or more days per week?

Or do you derive joy from your hobby because you use it as an escape from your worklife?

2. Do you have a clear idea of approximately how many other people enjoy your hobby?

A round number will do, such as "more than 100,000 people".

If you don’t already have a sense of the size of your hobby-users group, visit your library’s reference room and ask to see the Encyclopedia of Associations.

Look under the alphabetical category that contains your hobby, such as "F" for flying. See if there is a trade association that serves individuals who participate in your hobby.

If there is, use the phone number in the Encyclopedia to contact the association.

Ask for some general information on the number and characteristics of your fellow hobbyists, such as the approximate number of participants

3. Do you know everything you need to know about how to replicate the hobby for others, such as where to buy supplies at wholesale cost, how much money it takes to start the business full-time, whether licenses or permits are required to run such a business, etc.?

You know what you pay to enjoy your hobby. Are your costs typical of other users?

If so, how much do you think you can charge per hour, per trip, per unit of product, etc.?

4. At your proposed price per use, how much profit (dollars or %) do you think you can make?

5. How many users will you have to sell in a year to cover your expected business expenses…and pay yourself your desired salary?

6. Can you find at least one other person in the U.S. (or overseas) who has successfully turned your hobby into a profitable business?

If yes, try contacting them to see if they will chat.

Some questions you can ask them include:

How long did it take you to make a regular profit? What were your most effective sources of customers?

What was the most unexpected challenge you faced?

I’ve worked with dozens of 50+ people who have found their inspiration for starting a business in their hobbies.

For example: Tom, who started a fishing expedition company after retirement near his favorite vacation spot.

Or, Sue, who turned her experience redecorating her condo on a budget into a profitable home rehab business.

The key to success is to not let yourself be blinded by the belief that because you enjoy the hobby and are good at it, then surely many others will want your help doing the same hobby.

For many people, part of the joy of having a hobby is teaching themselves how to do it. They may not be too willing to spend money for help from outsiders. You need to research the marketplace for your hobby the same way you research the prospects for any kind of business.

Home Is Where The Boomer Business Is

Since more than 95% of our Boomer business start-up clients start with their business offices at home, I frequently think of the topic of working from home.

What often flashes through my mind is my personal experience almost twenty years ago as a home-based entrepreneur.

Back in 1988, when I launched my first entrepreneurial training company, it was not yet widely accepted that home-based businesses were really “professional”. 

In particular, large corporate prospects often inferred a lack of ambition or sophistication when a new business chose to locate at home.

In fact, I had to go to some lengths to conceal the reality that my desk and file cabinet were physically located in my spare bedroom. I rented an outside mailing address and put it on my business cards. I would borrow the conference room in a nearby office meeting for important meetings with clients, I’d name-drop contacts I’d made during my corporate career at other large local corporations.

I’m an enthusiastic reader and I often browse the shelves at my local library for business how-to books. Once, early in my entrepreneurial career, I came across a book that totally changed my outlook about being a home-based business owner.

The book, “Working From Home” by Paul & Sarah Edwards pulled together every tool, resource and secret to creating a fun and very rewarding experience as a home-based business owner. Suddenly, I realized that working from home need only be a choice of location, not a limitation on the scale of one’s goals.

As my business grew, I eventually obtained a contract that required that I maintain office space in which to conduct client meetings and training sessions and I moved out of my home office.

But, as often happens in life, I made a full circle and returned to a home office again in 2005, after my wife and I renovated our house, partly to include a brand-new home office!

How To Look Big In Your 50+ Business When You're Really Small

During your first year in business you must continually work at perfecting a subtle, yet critically important game of projecting an image for your new business that says: "I'm established", "I'm experienced and connected", and most importantly, "I'm successful".

Most of our start-up clients in our Virtual Incubator Program are solo owners, many running their new businesses out of their dens, with no other staff.

So, it can be a real challenge to come off to prospective customers as the experienced, successful service provider that you know in your heart that you really are.

I started my first business at home twenty years ago, and I very quickly faced the reality of "looking big when you are really small" when a consulting client asked to meet me at "my office", which at the time consisted of my dining room table!

Fortunately for me, I was familiar with a nearby office building that not only rented offices but also its address for use by home based business owners.

I immediately called the building manager, introduced myself and asked if they had a conference room I could use for a hour to conduct a client meeting. Wanting to entice me to move into the building (which I later did), they were more than happy to assist me.

So, I directed my client to their address for our meeting.

On the way to the meeting, I stopped by the local office supply store and purchased a set of plastic letters that spelled out my company's name. I placed these on the tenant board in the lobby of the building, just to give a bit more credibility to my professional image.

I think that you can see from my personal example that "playing the identity game" sometimes requires imagination and ingenuity.

Here are a few tips on building and maintaining a top-notch identity for your business:

1. Start with a professionally designed logo that "knocks their eyes out".

2. Use your power logo on an equally impressive business card. Don't just drop by your local office supply store and quickly order some business cards from a catalog. Remember: your business card is a mini-billboard for your business!

3.  Use a well-thought-out and well-recorded message on your business voicemail.
4. Pay a bit more to use a truly artistic website designer. Websites are today to what business cards where twenty-five years ago. Prospective customers will not take your business seriously without an eye-catching and well worded website to tell your business's unique story.

5. Consider buying and using a professional appearing "leave behind" with your logo printed on it. Popular items include: pens, envelope slitters, and notepads.

6. Make sure that any correspondence, bids, or client reports are error-free, printed on substantial paper and bound professionally, in necessary. Use your power logo on every page.

7. Return phone calls and e-mail inquiries quickly. Be sure to include a closing "signature" on your e-mails that includes: your name, phone number, e-mail address, website address, and short passage of text presenting your business's unique offer, such as "the fastest delivery in the three-county area".

What's Life Like As a 50+ Business Owner?

If you're like a growing number of Boomers, you're quite interested in exploring starting your own business.

But running a small business seems so different from what you're used to in the corporate world, that you may be wondering: "What exactly is life like when you run your own business?"

There is some variation in daily routine between different types of businesses, but most share the traits listed below.

1. You set the schedule for each day. People in typical corporate administrative jobs often face a more rigid schedule of meetings and in-office work.

2. You won't gain absolute freedom from reporting to a superior. Your new "bosses" will be your customers - but see the next bullet point.

3. Unlike the corporate world where you generally cannot choose your boss, you can often choose your customers so that you select people with whom you enjoy working. You can choose a type of business that typically has employees (such as a retail business), or you can create a "virtual company" that relies upon outside contractors for needed assistance rather than employees.

4. All problems end up on your desk, no matter who else may have caused the problem. If you have been a divisional executive, you are experienced at handling problems quickly. But some corporate employees become used to passing problems onto support departments.

5. You must respond quickly to customer needs, demands and problems, because this responsiveness is often why your customers agreed to buy from you in the first place. As a result, you often must make decisions based on incomplete information.

6. It has been said that one of the traits of successful entrepreneurs is that they are comfortable with "ambiguity" - unclear circumstances.

7. You will have to fight the tendency to think about your business every waking hour of the day. You must learn the difference between dedication and obsession.

8. You will sacrifice leisure time in the beginning. If you have been working 60+ hour weeks, chances are good that you had to give up the bowling league a long time ago. During your first year in business, you may have to also give up your family trip to Disney World.

9. You will have to become somewhat proficient in a variety of management skills (we will discuss these in detail later). Although as your profits grow, you can hire outside contractors to do more of the work for you.

10. You will have to take some financial risk. It is not uncommon for business startup expenses to total $10,000 or more. Your investment in the business during its first year can easily exceed $30,000 if you are truly trying to grow the business.

11. Because you will likely have to give up some things you enjoy during the first couple years of your new business, it is very important that you start a business you enjoy, or you will become resentful about the demands on your life.

12. Your income can be quite unpredictable in the beginning. It is not uncommon to go from an $80,000 corporate salary to a $30,000 owners draw your first year.

13. Since you cannot realistically cut your family living expenses by much, the difference between your old salary and your new self-employment income will have to be made up by investing your savings, borrowing money or a combination of both. This is part of the financial risk you take to do "your own thing".

14. You are paid by your customers partly for your ability to stay up with the latest solutions to their problems. This demands that you continually acquire new knowledge and learn new skills.

The Greater Risk Can Be Not Doing Something That Excites You

I read a lot of material every month on how the Boomers are approaching the period of life after age 60.

And what I'm seeing reported in virtually every major newspaper and magazine is that more and more of the 50+ Boomers, often called the "Leading Edge Boomers", are showing an increased willingness to take a calculated financial risk in order to launch a business or non-profit built around work they really enjoy doing...and in some cases have been yearning to do for years.

A prominent example of major media coverage of this topic is an op-ed column in the August 13, 2007 issue of Time magazine (see page 54).

The author, Dan Kadlec, starts by saying: "Money experts warn it's a bad idea to use some of one's retirement savings to start a new venture".

But Dan reports that about a third of self-employed people over 50 didn't strike out on their own until after age 50.

So, there are a whole lot of experienced, talented, smart people who are carefully considering how to utilize a bit of their retirement savings to achieve true satisfaction in their work by bringing to life their long-thought-about business or non-profit venture.

The real food for thought in Dan's piece comes at the end, where he says: "If you overdo things you'll risk your financial security. So be careful. But remember there are other risks in play too, like the risk of losing your sense of purpose by missing the chance to do something that excites you".