Boomers are changing retirement from our parents' version - lounging and early-bird specials - to our own brand: starting our "second act," taking up something we love to do but didn't have time to pursue during our career.
If that's something you're considering, or you know someone who is, read on.
Here are the 5 most common mistakes we make, and how to avoid them, from Boomer Second Act Coach and author Kathleen Rich-New who has spent extensive time studying successful & unsuccessful new mid-life businesses:
You must have real clarity around the why of your business before starting it. Otherwise, you’ll likely be stymied by the “yeah, buts” ("yeah, but I’m not sure how to do this") and will find yourself giving up before achieving success.
Your vision for your enterprise needs to pass the mind/gut test: Be clearly developed and feel right. If it does, you’ll then be able to view pesky startup problems as minor irritations.
Since the success rate for new businesses is low, many banks are reluctant to back new ventures, and they’ve become especially restrictive on lending since the financial meltdown. Typically, the only way you’ll be able to get a loan for your enterprise is by pledging as collateral the equity in your house or your investments or other assets, which means if your business fails, the bank will own the all you've pledged.
Better to finance your business through personal savings, credit cards, opening a home equity loan, or selling some assets. Estimate how much you’ll need to support the business and still cover your personal expenses for up to three years. (It can easily take that long before turning a profit.) Then, add an additional 50% to that figure, because with launches, things rarely go as planned.
For advice on financing your new business, you might want to work with a free expert consultant from SCORE, the nonprofit resource partner of the Small Business Administration that’s dedicated to educating entrepreneurs and helping them succeed.
For some reason, many first-time entrepreneurs forget this key fact: To succeed, you must be able to sell the product/service you’re offering. And, frankly, that's not easy.
Potential clients have already established their buying habits and chosen their service providers. You have to woo them away from their comfort zones, offer compelling reasons to make a switch then exceed their expectations so they’ll keep coming back.
People buy for two reasons: to avoid pain or to gain pleasure. If you find their pain and can fix it, you’ll earn their business.
With that in mind, spend the time to comprehensively identify your ideal customers then determine how you plan to target them in your marketing.
Ex: If you plan to enter the skin care business, “anyone with skin” is not your client. You’re actually looking for people over 45, who are concerned about wrinkles and feel a need to look younger and fresher. Go after them to fix their (figurative) pain.
Figuring out how you’ll eventually unload your company when you haven’t even opened it yet may sound odd. But it’s important to begin with the end in mind as Stephen Covey urged in The Seven Habits of Highly Successful People. This way, the decisions you make about growing the business will be more likely to attract investors who share your exit strategy.
Many new entrepreneurs don’t think about how they’ll recover the time and money they’ll put in. They just figure everything will work out in the end. But if you assume you’ll easily be able to sell your business whenever you’re ready to move on, you’re wrong. Only about 10% of businesses that are put up for sale actually get sold.
The rest go begging because they’re either not profitable enough to attract a buyer or their owners don’t have financial documentation to establish what they’re worth. (This article “3 Mistakes to Avoid When Selling Your Business” can help you develop a smart exit strategy.)
Your loved ones will be affected in a variety of ways when you start a business - like stress regarding the money you’ll be pouring into the business, or vacations may not be possible for a while, or long work hours - so you’ll need their initial and continued support.
Starting a business requires an 24/7 mindset and lifestyle, at least in the beginning. The more everyone you care about understands this, the more likely your business will succeed and your relationships will remain intact.
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