Chapter 12: Business in retirement
While busy with our careers, we tend to have a higher concept of our importance to society. Work is a meaningful act because it creates value (not only monetary). When we stop work we lose that value and this can lead to depression and isolation. Often a retiree cannot continue to work, as society does not value the contribution an older person can make. Many retirees take on lowly paying jobs as a result of this attitude, because of need or sheer boredom. Retirees have immense skills, born of experience, fortitude and intelligence. They have simply retired, not lost their brain, but circumstance may make them feel otherwise.
People in 50-60s start businesses at twice the rate of those in their 20s. Necessity normally drives this need. Entrepreneurship rises in recession and “lifetime” employment when over 50, declines in the recessionary period.
People past retirement age do not necessarily have to carry on in the same jobs as before. In Japan pensions are small and lots of people are still working in their later 60s and even 70s. Companies like Hitachi have found ways of re-employing staff after retirement—but in a different capacity and, significantly, at lower pay. Companies have asked their high skills employees to work for shorter hours or to consult. Some retailers such as Wal-Mart or Britain's B&Q, and caterers such as McDonald's, have started hiring pensioners because their customers find them friendlier and more helpful. In addition skills shortages has caused companies to bring back older workers. A retirement plan in which the future pensioner decides to upskill in an area of skills shortages is not the worst idea one can have.
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Ernst is an engineer who consults to mines. At his retirement he has upskilled on project management and started a new business in which he contracts to countries such as Mali and Ghana. This allows him to oversee new engineers with the benefit of his experience in occupations where experience counts, but without the drawdown of a younger person who would be hesitant to impart their knowledge because of the danger they would then damage an incoming income stream. |
Pensioners can also consider starting their own business. New business can be a risky business, for the first time business person and catastrophic for the pensioner! Many pensioners risk all the retirement provisions into such a vehicle and loose it when the business fails. However a small business can also give great comfort and bring in some spending money. The same rules apply to a retiree business as to normal business. Think, do an analyses, think again and only then act.
The retiree may look at using their hobby as a business.
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Tandy, loves her sewing hobby and wants to open up an embroidery service, to bring in extra money during her retirement. She has a domestic embroidery machine, but feels she would need a bigger industrial machine. She will require a loan for this machine. She has done embroidery as a favour to her friends and she thinks there is a market. How should she go about this process of creating a business? She would need to create a Marketing Plan. The marketing plan is a highly detailed, heavily researched, document that describes the benefits the customer gets when using or buying the product. It will detail her:
It includes the 4 Ps of Marketing
Tandy should then run a test drive using her domestic machine to accumulate the figures and determine if the demand will require an industrial machine, If her product sells she can then move onto the next phase of her business plan and apply for a loan. Tandy determined she would first be advised to use her existing machine, doing private jobs. Her name became known and she started to do small lots for companies. She bought a second hand industrial machine and makes a comfortable income. She uses her domestic machine and has got her friend involved in helping with larger orders. |
By starting small and containing costs Tandy was able to supplement her pension. Tandy had a skill and a machine, which puts her into a fortunate category. If Tandy had to get a loan to buy her equipment, her business may not have been successful. A business needs cash to survive, and loans eat cash reserves as they need to be paid.
Some pensioners have an external interest or may have been helping with the grandkids. As a result they could decide to make this into their retirement business.
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David has a great interest in his grandson and the school he attends. David went to the same school as did his father before him. His grandson has become passionate about rowing and David has been able to accompany him to the rowing heats. David is very hands on and loves DIY. When the opportunity came to buy a rowing scull for his grandson, for an affordable price due to the work needed, David decided to restore the scull as a project. David enjoyed restoring his grandson’s rowing scull. The school after seeing the result asks him to undertake their rowing boat maintenance. David suggests that he either gets remunerated per hour of work, or on a contingency of sixteen hours per month. The school will pay for any material he requires. The school obtains his services on this contingency basis, which means they get an enthusiastic member of the team, David enjoys his work and is frequently at the boatsheds repairing the boats. He enjoys interacting with the students. Although David is doing a service for a school, he has ensured he is not to be abused. It is very easy for a pensioner to agree to voluntarily take on work for no compensation. Such a situation can lead to the person not being treated with the same respect and consideration a salaried employee would receive. |