By Jean Newell, Boomerprenuer
Were you born between 1946-1964? If so and you’re thinking about starting a home based business, you will be joining the ranks of the fastest growing segment of the population becoming entrepreneurs; baby boomers.
At midlife and beyond, more and more people are searching for new financial solutions. Many boomers ready to retire now find their portfolios aren’t as solvent as predicted and the need for additional streams of income has become a necessity. A home- based business would seem to be the perfect solution.
Business gurus suggest if you do something that you love, you’ll never work a day in your life. The truth of the mater is, you will work longer hours than ever before for little or no income as your business slowly develops. It may seem obvious, but if you’re still employed don’t quit your day job until you’ve done your due diligence.
Here are some tips to consider when planning a home-based business:
1) Make sure there is a need for your new business, service or product. Hold focus groups with your friends, family and associates to get their input on your business idea.
2) Keep your costs at a minimum. Work out of your home as long as possible. Don’t be tempted to rent a building, office or warehouse space until it’s absolutely warranted.
3) Take advantage of the free advice, counseling and seminars offered by the Small Business Administration and other business associations found in your local universities. These organizations offer seminars on marketing, computers, bookkeeping and finance. This is also an excellent opportunity to network with other entrepreneurs.
4) Keep a file of business cards of all of the people you meet. Enter their contact information into an electronic database. Stay in touch with these associates every couple of months by email or postcard with a short scenario of your business progression. These first business contacts are your building blocks to your networking database.
5) Find a mentor who will help guide you through the initial phase of operation. This person can be retired from the same business you are exploring or currently employed in a non competing field.
6) Research your field. Are there any licenses or special affiliations you will need to obtain? Does your municipality or homeowner’s associations allow a home based business?
7) Create a business plan and determine what funding you will need for: start up expenses, equipment or inventory of goods. Because of the subprime mortgage crisis, banks are far more conservative now than in the past few years. Their main focus is on your ability to pay back the loan as opposed to what the money will be used for.
I found as a new business it was a challenge to find funding. Several years ago I needed a short term loan to fulfill a large order with QVC. I assumed because I had a purchase order it would be simple. Every bank I went to said “How long have you been in business?” Unfortunately, four months was not the answer they were looking for. Luckily I had previously opened a home equity loan which had a -0- balance, which I used.
If you are currently employed, obtain a line of credit now, while you have the necessary income to qualify. Don’t make the mistake of trying to get a loan after you retire or leave a job. You may need to explore other avenues as well. Does your retirement fund have a pay out or private loan associated with it?
As a Boomer you may be tempted to cash out a life insurance policy or your 401K. Here lies the difference between Boomers and their junior counterparts. Younger entrepreneurs can afford to make a few mistakes and still have time to financially bounce back, while Boomers may not have sufficient time to make up a financial loss.
In summary, if a home based business is in your future, plan ahead for funding, research your field, use the educational facilities of the Small Business Administration and colleges to increase your odds of success.