When it comes to creating a business at midlife, bigger isn’t always better.
Or even what you really want.
As you begin to reimagine your life after age 50, clearly envisioning what your lifestyle might be like becomes even more important to your new business planning.
Doing this planning requires having a good handle on what your finances actually are — or need to be — in order to support the lifestyle you want.
If you know for certain you’ll have more than sufficient resources to fund your post-50 years into retirement, you probably won’t feel a need to create a business.
You might think a new business would be fun and keep you busy, and this can be true. However, if you don’t actually need your business to make a profit, you’ll likely fall into the trap of designing it that way.
Down the road, anyone else you might want to sell your business to, would expect it to be profitable. If your business has instead been operated more as a hobby it won’t be attractive to buyers.
So when you’re starting a business at midlife, it’s important to create one that’s right for you AND will provide a return on the investment you make in it.
I call this different approach to business planning after age 50, ‘Right-Sizing.’
Right-Sizing will help you determine:
• the size or scope your business requires to provide the income you’ll need as you proceed toward your ‘retirement years,’
• how it can fit you and your lifestyle, and
• the best business structure to achieve the mission and goals important to you.
Most importantly, Right-Sizing takes a different perspective on your midlife business because business ventures are just plain different after age 50 — not to mention the fact that starting and growing a small business today is dramatically different than in earlier years.
It’s not that any particular stage or phase of business development is unnecessary or can be skipped just because you find yourself in midlife.
Instead, Right-Sizing considers supplemental factors or nuances that must be added to the classical steps involved in starting a business.
Let’s take a look at what that means…
What additional considerations does planning a business after 50 require?
(1) A Change in Mindset
Most of us Baby Boomers are used to planning things out thoroughly before making a move. If you think back to when you went to school and accepted your first job, you were probably planning your career path several years ahead, identifying the best job sequences to provide experiences that would enhance your resume.
All that planning ahead and ‘covering all the bases’ used to be considered a positive thing. But planning that far ahead now not only isn’t very helpful, but is, in fact, often impossible.
The world is changing too rapidly, and basing your business on products or services that were selling well even six months ago is no guarantee of success. Technologies used to make your products or deliver them to customers or clients are updated monthly, weekly even every few days. Your rate of speed in creating your business can have a make or break effect on it, even causing you to miss your windows of opportunity entirely.
(2) An Experimental Approach: The Minimum Viable Startup
Slow and careful no longer wins the race. We still need to minimize risk, by limiting how much of our own financial resources we put into our business ideas while testing them out.
And this is where the concept of ‘Minimum Viability’ or a ‘Minimum Viable Startup’ comes into play.
Minimum Viability is a business development strategy that minimizes your risk while maximizing your learning about your market, and customers or clients.
Approaching your business as a ‘Minimum Viable Startup’ requires you to view your business idea as an experiment that you test out on a small scale, before making too many assumptions and moving full speed toward developing your products or services. Another way to look at it is: Creating a Minimum Viable Startup is a type of market research that you conduct (usually) BEFORE you take steps to officially set up your business.
Exploring your product or service ideas in small ways – with a Minimum Viable Product – before jumping into the formalities of creating a business allows you to do the learning you need to do so you can fail quickly, and adapt or change direction.
The main advantage of a minimum viable startup is it can protect you from losing your shirt by preventing you from developing products or services your prospective market has no interest in, and will not buy.
Which leads us to our next consideration:
(3) Limiting Your Personal Financial Risk
Not completely separate from the other considerations listed here is the goal of limiting financial risk by limiting investment of your personal assets.
Banks are less likely to give startup loans to those over age 50 not just because of the high mortality rate for new businesses surviving their first few years, but because of the loan applicant’s age and potential health challenges which might affect payback of the loan.
The fact that so many baby boomers have access to their own assets which they can put up as collateral — homes, investments and even expected social security and pensions — also generally allows banks to ‘give’ you a loan while tying up your assets to the loan’s repayment. So in reality, they’re not giving you anything. They are fully covered!
On the bright side, it’s a rare bank that asks for a ten year business plan anymore. They realize the uselessness of trying to forecast into a future that won’t exist by the time you actually get there. Five years out is about as future-oriented as most banks get.
If you know it’s going to be your money that’s invested one way or the other, now or later, why not take the small steps to test your idea. Lose small and learn big now. Not later.
(4) Maximizing Your Investment
Of course we invest more than money in our businesses. We invest our time and most of all, ourselves.
And the older we get, the more we need to make the most of our time. We’ll likely have greater health and physical challenges as we age, and therefore our ability — and willingness — to put in 10 and 12 hour days every day tends to decrease. It’s important to forecast the best you can about your physical ability to keep up with the demands of the business you develop.
Spending your energy now during your startup stage to create a business that can sustain you later by allowing a slower work pace to maintain it, is time well spent.
(5) Building-in Lifestyle Flexibility
The concept of ‘lifestyle businesses’ is popular and often discussed, whether it’s talk about how to best create a business around the needs of stay-at-home moms, digital nomads who want to travel the world, or the wishful-thinking of creating businesses that only require four-hour work weeks.
For those over 50, having a flexible schedule may also be important due to caregiving responsibilities for aging parents or grandchildren, your own health challenges or those of your spouse, even old injuries that flare up and change your ability to put in 8 hour days. Being able to pace your work day in a comfortable way or schedule errands or a medical appointment in the middle of the day as needed, become more important.
The truth is you may not want to create a business that requires your full time devotion.
You might prefer to create a business that can be sustained on a part time or seasonal basis rather than consume your life as your previous career may have. Consider one that would allow you to travel. Perhaps, take afternoon classes while you pursue a degree or license. Or let you visit the kids or grandkids without having to close your business operations for a few days to do so.
It’s going to be your business, and you can create it however you want.
The key is to know what you want.
(6) Believing Small is Beautiful
Most of us come from a world of business that believed ‘bigger was better,’ and that constant massive growth through mergers or acquisitions was the only way for a business to be successful. To hold sales steady or God-forbid downsize was usually considered a negative event or step in the wrong direction.
But when it comes to creating the best midlife business for you, here’s the deal:.
A truly small business is more flexible, and can turn on a dime. It’s adaptable to market changes or your new ideas. If you start with ‘just you’, you can come up with an idea when you’re turning over in bed and start exploring it the next morning on Google or in your community, instead of writing proposals that have to pass through layers of bureaucracy to get permission to proceed, as the corporate model would require.
The shorter your time to market, the more quickly you can test your idea in a minimally viable way: learn from it, revise or redesign, or head in a completely different direction. That’s the freedom a Minimum Viable Startup gives you.
The direction we’re going to head in our future posts is to begin exploring the Right-Sizing planning process to create your Minimum Viable Startup:
1. Discover Your Income Gap
2. Envision Your Post-50 Life and Lifestyle
3. Choose and Validate Your Business Idea
4. Assess Your Business Idea’s Potential Revenue & Expenses
5. Develop Your Minimum Viable Startup Strategy, Audience or Market
6. Test your Business Idea with a Minimum Viable Product
7. Evaluate your results: Move forward or re-group.