How to Choose Your Best Retirement Business
What’s the best retirement business for you? Much advice on this subject is mediocre or generic, and doesn’t really get to the heart of how to choose a retirement business to match your personality and the lifestyle you envision. It’s really important to think clearly, avoid gurus and Internet marketing products telling you what to create, and choose a business with the same careful consideration you use to make other investments of your time and money.
Should You Buy or Create?
Choose wisely when you wade into entrepreneurial waters. You’ll either be starting from scratch or working hard to maximize returns on your investment into someone else’s idea. Passive income is usually a misnomer not related to actively participating in a new venture, at least at first, so a good fit to your entrepreneurial aspirations is the key to happiness.
An up and running business is a great way to jump-start cash flow and learn while earning. Someone else has laid the groundwork and you get to refine operations, expand the audience, or otherwise improve the existing business. The previous owner’s missed opportunities can generate quick and satisfying rewards.
Sometimes things are a bit messy though, and instead of just pursuing new revenue, you might have to work on fixing broken processes, dealing with leftover client issues, and other distracting tasks. Know what you are buying, and many of these pitfalls can be avoided. Read our Buying a Business tips page after you are done assessing your choice for fit.
No messes to clean up, but usually a longer timeline to cash flow, and lots of groundwork and set-up to accomplish. If you have a good idea and know how to execute, you might be in a good position to start from the beginning doing things your way. Consider your own ideas carefully.
Make sure there is a market before proceeding, and don’t get blinded by your enthusiasm for a potentially non-existent customer segment. With that said, starting a new business is sometimes the only way to get what you want out of ownership. If done correctly it can also be quite a bit cheaper than buying existing cash flow. Look at through our Best Small Business Ideas posts if you need inspiration.
Ask Yourself These Important Questions
Owner Time Commitment and Involvement – How many hours per day, week, or month? Hands-on or managed by others?
Stress and Pace – What is your tolerable level of stress and risk? How well do you handle deadlines and working quickly?
Level of Customer Interaction – Completely online and invisible, or available by phone or in person?
Interests and Enjoyment – Regardless of the business product or service, what aspects of running a business might you enjoy most?
Products, Process, or Service – Want to sell a thing, a “done for you” process or tool, or an ongoing or one-time service?
Size of Business – Want to take over a category or number one position in your topic or town? Or just looking for a small niche to focus on?
Cost to Start or Buy – How much can you invest without it being a stressful endeavor, or one that could harm your retirement plans?
Overhead, Ongoing Capital and Operational Expenses – Each business has it’s own overhead costs, some are money up front, some payable over time.
Expenses Match Your Interests – Are the “owner benefits” in line with your interests so that some of your expenses work in your favor?
Legal Exposure – Assess your product or service carefully for risk. Is it a consumable, dangerous activity, or otherwise potentially problematic?
Difficulty of Starting and Growing
Copycatters – How easy will it be for someone else to jump in and offer the same concept quickly and more effectively?
Commoditization – Do lots of people offer the same thing and compete on price alone? If so prices are subject to a never-ending spiral.
Dependence on Recurring Customers – Do customers need to stick around or is one-off volume more your kind of thing?
B to B or B to C – Selling to businesses or consumers? B to B can be quite rewarding, so don’t skip over these kind of business ideas.
Skills and Training Requirements
Ongoing Education – Are there legal or industry expectations for continued education in your field? If so, will you enjoy or dread it?
Saleability – Partners, marriage issues, debt, outdated equipment, owner seen as primary revenue driver, and lots of other things make a business tougher to sell.