5 Tips for Starting a Business in Retirement

Many retirees are in an excellent position to launch a new venture.

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Starting a business is a great way to spend your retirement years. Not only will it keep your mind sharp and give you something to do with your free time, but it could potentially leave you with a solid stream of additional income. If you're going to start a business in retirement, here are some tips to make the most of the experience.

[See 10 Ways to Boost Your Social Security Checks.]

Connect with other entrepreneurs and resources. Don't go it alone. Before you dive into a business idea, spend some time with other entrepreneurs. Small business owners love talking about their business and sharing ideas to improve the bottom line. Attend your local small business association (SBA) networking meeting. Some SBAs offer free mentoring sessions for upstart entrepreneurs. Also, look for online resources that could help you connect with fellow business owners. You'll come away with lots of good business ideas, strategies, and tips for getting started down the right path.

Build the business around your desired lifestyle. You're in retirement now. The last thing you want to do is create a bunch of new obligations for yourself. You want a good mix of life and business. Choose a business model and a participation level that allows you to live the life you want in retirement. For example, if you only want to spend ten hours a week on your business or have the flexibility to travel, then make sure you design a business that allows you to do that. It might mean fewer clients and sales, but you'll be happier. Another approach to consider is to skip the sole-proprietorship and start a business with your friends or family. You'll be spending time with the people you care about and getting some much needed social interaction.

[Visit the U.S. News Retirement site for more planning ideas and advice.]

Leverage your connections and career experience. You've spent your entire full-time career building a skill set and connections that can now be leveraged in your small business pursuits. Is there a way for you to offer your services as a part-time consultant to your former employer or their customers? Your knowledge of the industry is likely very valuable to these people. Pitch them a plan in which you continue to offer them your expertise on your time table and schedule.

Avoid using your retirement funds. Your retirement funds should be used for your expenses in retirement, not starting a business. You probably have most of your assets in very conservative investments at this point. Why would you risk your nest egg on a business venture? Some businesses don't need much start up capital. Make it a goal to start a business without money and reinvest the profits.

[See 25 Things to Do When You Retire.]

Create a turn-key business. Consider creating a business that you can walk away from. You may not want or be able to run this business for more than five or ten years. Create a business that you can sell or give to your heirs. This means devoting time each week to work yourself out of the business. Five years into retirement, if you're ready to be done with work completely, you won't be stuck with a business that you can't sell or hand off.

Philip Taylor is the author of 104 Ways to Save Extra Money. Read his popular blog, PT Money: Personal Finance for more insightful money tips, like his recent suggestions for the best online checking accounts.