Canadian baby boomers will be making the most of their down time, with millions expected to launch ‘semi-retirement’ businesses as their careers wind down.
A BMO Retirement Institute report found that more than half (52 per cent) of boomers surveyed are drawn to entrepreneurial activity because they like the idea of working for themselves, while only 11 per cent cited job loss as the reason for launching a new company.
The most commonly cited source for funding for boomers looking to start a business is a withdrawal from personal savings, followed by taking out a loan.
“For an increasing number of Canadians, retirement isn’t about a definitive shift from work to leisure,” said Tina Di Vito of BMO Retirement Institute. “Rather, it’s more of an extended transition that involves a combination of both.”
This ‘boomerpreneur’ trend, where Canadians on the cusp of retirement are looking to realize their self-employment dreams, is expected to grow as boomers start to retire in greater numbers over the next few years.
However, those considering it should understand that entrepreneurship involves an enormous financial commitment that is best managed with the assistance of an experienced financial professional.
This year, the first of the boomers turn 65 and became eligible for retirement. As Canadians start to retire in greater numbers, the ‘boomerpreneur’ phenomenon could lead to Canada experiencing a surge of new businesses that, planned and managed prudently, should provide a positive economic boost in the long-term. Conversely, the lack of sufficient preparation could have an overall negative effect on the economy and the business owner.
Di Vito offers the following advice:
Do your research – Take advantage of your resources to learn all you need to know to set up your company. This includes gaining industry insight, arranging a new phone number, deciding whether or not to incorporate the business and looking into the potential tax implications.
Consider the pros and cons – Think carefully about why you want to start your own business. Being your own boss can offer some flexibility. However, other sacrifices, such as longer hours and a possible decrease in cash flow may be necessary to ensure your success.
Develop a plan – Stress-test your idea and research your marketplace, including what products and services you will be offering, their appropriate price points, who your potential customers are and what your sales targets will need to be to cover your costs. Keep your end goal in mind as you build your company and maintain a positive, yet realistic, outlook as you progress.
Seek outside advice – Speak to an accountant and a small business banker. Financial specialists can provide insight into setting up your company, market competition, personal and business capital and how it may change over time.