Work

Should I Start a New Business? 6 Questions to Ask Yourself Before You Decide

Wait! Do you really have what it takes?

SPECIAL ADVERTISING SECTION FROM THE HARTFORD

At age 59, rather than contemplate a retirement of golf and reading, Nick Mannino mulled the possibility of starting a new business. He didn’t really need the money—he previously owned and operated a successful research call center for 18 years, prior to selling it in 2010. But, he felt the tug of doing something for others.

In 2012, Mannino launched a new business.  In two years, the business has grown from one office to three and revenues are up 25 percent year-over-year. "The dynamics of a health care business intrigued me because it gave me the opportunity to be in a marketplace that is growing, while at the same time be in an industry whose purpose is to help people in need,” he says.

1. Do I have what it takes?

Many other people Mannino’s age have likely considered starting their own companies, but stalled when it came time to pull the trigger. This is not surprising, as eight out of ten entrepreneurs who start new businesses fail within the first 19 months, according to Bloomberg. But, what many older people have at their disposal that many younger people lack is actual business experience. They’ve accumulated knowledge through the years on every aspect of business, and often know what works and doesn’t work.

Still, discerning whether or not it is time to launch a new business is challenging, if not frightening. Older people wonder, “Do I have what it takes at my age—the energy and skills to run a company and manage people?

Many do, in fact. Attorney Rebecca Sarelson, a partner at Miami-based law firm Arnstein & Lehr, advises entrepreneurs of all ages on the pros and cons of different business structures from a tax implication and legal liability standpoint. In recent years, she has noticed a distinct uptick in the number of businesses launched by the post-50 set, many now successful enterprises.

2. Am I on the retirement path or the start-up path?

“Twenty years ago, people at 50 were generally on the path toward retirement, their nest eggs squirreled away to last them through the next couple decades,” Sarelson says. “But, today this is almost a quaint view. People are living so much longer and 50 feels like 30. It’s not unusual for someone in their 50s and 60s to suddenly feel a second run at a new life.”

This new life is not for the fainthearted, however. A great idea for a new business is just that—an idea. Entrepreneurs must consider so many issues beyond inspiration before plunging ahead, including where the seed money will come from, what the business expenses are likely to be in the first six to twelve months, will the revenue from the venture cover these anticipated expenses, and if not the case, where will the additional funding to keep the doors open come from?

3. Do I have an entrepreneurial mindset?

More important is what it personally takes to run a company. “Not everyone is cut out to be an entrepreneur,” says Jerry White, director of the Caruth Institute for Entrepreneurship at Southern Methodist University White explains. “The best ones have the ability to see what needs to be done and to either do it themselves or get it done. They also know what to do in chaotic situations—figuring out solutions to problems while others are trying to figure out what the problem is.”

4. Do I have a passion for the product?

Another clear sign in an entrepreneur is passion, the case with Mannino, who wanted to provide something of value to his home state. He also had other skills up his sleeve: Having previously run a company, he instinctively knew how to manage a workforce and understood accounting, HR and operational excellence. 

5. What's my exit strategy?

Older individuals also must consider something else before a business launch—the exit strategy. “You’re not going to be around for 50 years to run the business and need to determine whether you’ll wind it down at some point, sell it or leave it to the kids,” Sarelson says.

6. Do I have a good idea for a business? Is it scalable?

If all the above seems doable, then starting a business just might be in order. Obviously, one needs a good idea to begin with—a product or service that is better than what previously exists or fills a niche that is currently unfilled. Once the business enterprise is clearly in mind, Jim Grew, president of management consultancy The Grew Company, advises preparing a checklist responding to the following questions:

  • What does the product or service specifically do?
  • Why it is better than the status quo?
  • Who will buy it?
  • What will they pay for it?
  • How will it be made?
  • What will it cost to make or provide it?
  • How do you get customers to buy it?
  • How will it be delivered to customers?
  • How much needs to be sold to make a living in the business?

“Without a product that folks want to buy repeatedly and not just once, there is no business,” Grew cautions.

One last bit of smart advice has to do with the start-up money to get the operation going.  Unlike younger individuals, the over-50 entrepreneur should invest only discretionary assets and not dip into their retirement portfolios. Otherwise, says Pete Lang, president of Lang Capital in Charlotte, NC., “a business failure could cause irreversible harm to one’s retirement.”

The bottom line recommendation: Make sure the expected returns from the business venture outweigh the risks of launching it.

Photo Credit:

Steve Hix/Somos/Getty