The recent economic downturn and slow recovery from it has generally changed the retirement plans of potentially millions of Americans, and one trend that became far more common during this time is that additional people in their 50s and 60s have decided to go into business for themselves when they would have traditionally been making the final preparations for their golden years.
Across the country, there is a large and growing number of what many experts are now calling "encore entrepreneurs" who are making the decision to start their own small businesses between the ages of 55 and 64, according to a report from Forbes. One 2010 study found that the rate at which they were doing so outpaced that of all other demographics who were creating their own companies, including those in their 20s and 30s, and now accounted for some 23 percent of all new small business owners. That in turn marked a stark increase from the just 14 percent of the group these older people comprised in 1996.
Many may be choosing to do this because they lost their long-time employment during or immediately following the recent national recession, the report said. During that time, many older workers who found themselves out of a job likely also had difficulty in securing a new one because many companies dramatically altered their hiring practices in recent years, and wanted to focus on younger workers who may not have had the experience that those in their 50s and 60s did, but were certainly less expensive to employ, and moreover may have a better grasp of new and emerging technology.
But for those older workers who aren't quite ready – whether financially or mentally – to move into full retirement, the prospect of running one's own company, and being their own boss, was likely tantalizing, the report said. Doing so allowed them to work as much or as little as they wanted, and also put their potentially decades of expertise in their chosen fields to good use.
What those considering such a move need
Of course, starting a small company of one's own isn't always easy, and older workers will need to make sure they've taken all the necessary steps before they dive headfirst into such an effort, the report said. The first thing many of these people will need is to put together a business plan, which can be the basis for all parts of the company's operations in its early days. However, older workers may also want to draw up something known as a concession plan, because, given how close to their retirement ages they may be, it might not be wise to start a business and then shutter it just a few years later, especially if it's growing successful.
Moreover, when starting a small business, many older workers who have never done so before will likely need a good deal of advice, the report said. Fortunately, a number of organizations and resources – including the Small Business Administration and AARP – now exist to help these people find the information they need to successfully operate their own companies, and make sure everything runs as efficiently as possible. These organizations may also be able to help older people find the financing they need to help start up their businesses, as that type of cash injection is often vital to early success.
New owners should also try to keep in mind that among the many costs they may need to cover are those for small business insurance, including liability and worker's comp coverage, which isn't always inexpensive.