Making Your Money Last
Starting Your Own Business
To succeed, rely on your experience and long-established contacts.
By Jane Bennett Clark, Senior Associate Editor, Kiplinger's Personal Finance
November 2007
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He was tired of his commute. She was tired of her routine. So Thomas and Connie Betts took the next logical step for a fiftysomething couple with a white-collar background. They bought an alpaca ranch.
Four years later, Cascade Alpacas of Oregon, in Hood River, is thriving. The Bettses breed and board huacaya alpacas, prized for their soft, fine wool, and they do a brisk business at Foothills Yarn & Fiber, a barnlike shop on the property. "It worked out better than we envisioned," says Connie, 54, a former software instructor. "We made money sooner than we thought we would."
Starting a business after 50 is not some wool-gatherer's fantasy: About one-sixth of 50-plus workers are in business for themselves, and one-third of them made the move after they passed the half-century mark. "It's the boomer business boom," says Jeff Williams, of Bizstarters, a consulting firm for 50-plus entrepreneurs.
In fact, baby-boomers have good reason to go solo, says Raymond Joabar, of OPEN, the small-business unit of American Express. "They are a lot more financially stable than someone who's 20 or 30, and they have knowledge and passion for what they do or what they would like to do." A layoff, forced early retirement, or the threat of either, is another incentive. Still, going from salary slave to self-made mogul takes careful planning.
Do your homework
Before you spend one penny on your brilliant idea, figure out who needs your product or service, how you expect to sell it and who you'll compete against. Market research (or the lack of it) can make or break a start-up, says Williams. "Everything flows from that." To begin, go to the library and study the demographics of your community, or stop by Score, a nonprofit organization that offers free counseling and training for entrepreneurs.
Chicagoan Ken Proskie took his legwork further. A 54-year-old specialist in occupational safety, Proskie knew plenty about his profession but little about consulting, his chosen career path after he was laid off. He took classes in small-business management, including Williams's course in marketing, sales, taxes and other basics. "I was up and running within 13 weeks," he reports. His business, Compass Health & Safety, advises companies on occupational risks.
Write a business plan
Idea fully formed? Write it down. A well-prepared outline not only helps you envision the development of your business but also guides lenders and investors. "People have a dream, but they can't explain what they want," says Bob Shephard, of the Orlando, Fla., chapter of Score. "If you have a business plan, you can say, 'Here it is -- let's talk about it.'"