Starting a Business After Retirement: Why It Makes Sense

Early retirement is now within reach.

Heard that one before? Sigh…

In less than a year I could pull the plug. But I need something to occupy my brain and keep me productive. Is starting a business after retirement a good idea?

I’ve got the raw materials to do something meaningful with all that freed-up time. The question is, what kind of business would I find low-stress, fulfilling, and flexible?

Starting a new business is difficult under the best of circumstances. Oftentimes, it requires cash (typically bank loans) to start up and a never-ending time commitment to keeping afloat.

Statistics on start-up survival are sobering. You aim big (say, a new restaurant, specialty shop, magazine publication, etc.) and your odds of being around in 5 years are slim.

What if you aim for “not-so-big”? What if the goal is to generate some positive cash flow, with a small amount of cash needed for a startup? These are the service-oriented businesses to consider if you want to start a side-hustle.

Independent contracting or consulting comes to mind. I think that’s the lane I’m going to pursue. As with any worthwhile endeavor, time to do a little homework!

What’s a Retiree to Do After Cubicle Life?

I don’t think I’ll be firing up a brewery anytime soon. That is one glutted market lemme tell ya. The folks that pour their hearts and souls into making craft beers have earned my appreciation and respect.

It’s incredibly hard work, and the competition is daunting. Most decent-sized metros have several taprooms anymore, with equipment and overhead costs to frighten most lenders off their seats.

So no, I’m going to avoid beverages, and for that matter, food too. No McCubert’s anytime soon. Though I’d probably have one of the nicest dining rooms in town if the reviews on our Airbnb are any indication…

What about blogging? There’s low overhead, and customer access is easy – everyone’s got the Internet. All you have to do is write something useful and halfway entertaining (slash) engaging.

EASY! Trouble is, you’ve got to have a product (or several products) or services you align with. Several Pinterest-oriented bloggers have reaped huge rewards with recipes or healthy living themes.

Even some personal finance bloggers have made substantial money by promoting classes and books. This blog here makes a few nickels each month by placing a few links from other companies, plus a random referral to SiteGround or Airbnb.

The catch (in my case anyhow) is that this particular blog is set up to serve those in need (i.e., non-profit.) All the money coming into Cubert Enterprises goes to Children’s Heartlink, and I prefer to keep it that way.

There’s certainly nothing wrong with trying to ratchet up earnings for a good cause, but I’m looking for sustainable cash flow for me and my family after early retirement.

I guess I could start up a new blog and call it “Gentrified Cubicle” or something. Offering only the finest prose, aligned with the best financial services your money cannot (or should not) buy. It’s an idea, but likely one blog is plenty enough for me.

There are countless ways to make money online, aside from blogging.

Starting a Property Management Business

• Buying and Selling
• Inspecting
• Flipping
• Leasing Properties (Doing this today)
• Managing Properties (Doing this today)

With buying and selling, the good news is real estate has a solid outlook since people need places to live, work, and play. Sure, there are bound to be more bubbles in almost every market, and not all markets are equal concerning supply and demand.

What if I took on a few different disciplines and combined them? Say, home inspections plus managing properties?

I’ve already taken on renting out single-family homes, so I know a few things already. And I’ve got to say, one of the more enjoyable aspects of searching for new rentals is checking out houses for sale.

All told, and I’m guessing a little bit here, my agent and I have been through at least fifty houses together since 2012. You see a lot of interesting things after a while.

Odd, ancient gravity furnaces that look like giant space-squid, DIY electrical work done with Russian-roulette care. Oh yeah, and the dead squirrel that got trapped in the house, after (apparently) falling through a detached dryer vent.

There’s also some character and quaintness. Like the houses without shower stalls. Back in the day, everyone just took a bath. It was a slower time… Wallpaper was hung with care (so that the only way to “remove” it is to paint over it).

The only catch with THIS GUY is I don’t like heights. Being a home inspector means getting up on rooftops. Dang.

I’ve been up on my roof, but it’s an easier deal on a single-story ranch house with a low pitch slope. A two or three-story McMansion would have me shaking on the ladder.

Time to conquer some fears? Get back to the climbing gym, perhaps?

At any rate, as profitable as real estate can be for small business startups, I’m 90% certain I’ll land here. The other 10%?

If I’m a sadist, I’ll find a part-time version of what I’m doing now – managing the chaos and inefficiencies of the corporate world. That’s about as appealing as 1960s wallpaper on the bathroom ceiling…

What Do I Need to Learn Before I Start?

First thing’s first. I need to figure out what type of business to form. There are several choices: Sole Proprietor, Limited Liability Company, and S-Corp, to name a few. These are the main dogs in the hunt though.

Because we’ve been running a few side gigs for so long, I have a decent sense of what each of these flavors offers. Take the LLC for example.

It’s fairly easy to set up an LLC. Just navigate to the state commerce website in which your LLC operates and apply with a nominal fee. But why would you want this structure?

The main benefit is that if you get sued, only the business is liable for damages. LLCs protect your assets.

With LLCs, just be careful not to “pierce the corporate veil”. It’s akin to crossing the streams, Ghost Busters style. All your business expenses should be paid for by the LLC, and all LLC assets should be exclusively used by and for the company.

Then there’s the S-Corp. The main benefit of this structure is your business avoids having to pay self-employment taxes (FICA).

The trade-off is you need an accountant to ensure your taxes are reporting the salary portion of your business income with precision. The S-Corp model can save you lots on taxes, but the setup and maintenance (accounting) come with a cost.

My preference is to use both the LLC liability protection, combined with the tax savings of the S-Corp. This is how my wife’s business is set up, and it has worked out quite well. But until my new business venture starts reeling in decent revenues of 20K or more, I’ll stick with the LLC to start with.

How about the practical stuff? Will I need employees? Will I need to sink a lot of money into any kind of equipment? What do the market and competitive landscape promise?

Whew! Sure makes lemonade stands seem easy… One thing I do know is employees are EXPENSIVE. The best bet for a small business start-up is to try to get by with contract labor, if at all possible.

Now, those contract workers should be paid a living wage, and when your business gets a strong footing, employees should be enlisted. But realize that employees come with rights and all sorts of tax implications. This can be harder to manage with a fragile, nascent startup.

With real estate, the hope is to avoid any equipment costs. However, with my dream of operating a bingo hall/taproom washed down the drain, I might need to set aside some dough for an office kegerator. We’ll see.

How about the market and competitive landscape?? I’ve got to do some research to see if I’ll be able to differentiate my real estate wizardry in a highly crowded field.

I’ll start with Google searches of property management companies in the area. Plus, I might consider a short-term internship for a shop I’m already familiar with. Learn from the inside first, before taking the plunge.

How Will I Measure Success?

It’s all about the KPIs, baby! KPI stands for Key Performance Indicators. Strong revenue yield is great, but profitability is even better. Take the Airbnb Experiment for example.

Last year this new side gig brought in super solid revenues. But the amount of money put in for setup made that inaugural year less profitable than it otherwise might’ve been.

Time to dust off the accounting 101 skills. For any new business to be successful, you’ve GOT to be familiar and grow attached to lovely spreadsheets. Balance sheets will rule the day.

You’ve got to track it all. And if you get the urge, sure, go pick up a Quick Books license or whatever.

For now, I’ll stick with trusty Microsoft Excel to track my assets and liabilities, and maybe even run some fancy-dancy forecast models. It’s a Friday night fiesta waiting to happen!

From the perspective of FIRE, where all things are chewed-through with a passion like none other. The first and most important thing is to ensure I’m not consuming every hour of the day with this endeavor.

Again, the goal is to limit this to part-time. SemiFIRE, all day, every day.

The cash flow has to be decent, generating oh, $2,000 a month? At least to start with. I recognize that it could take several months to turn a profit and see a dime of cash flow, so patience will be key.

More than anything else, success is measured by FREEDOM. Will the business I stand up for allows me and my family to travel on a whim?

Will I avoid phone calls at 2 AM to resolve clogged drains? I guess I could always hire an employee…

Your Next Steps

Research, research, research. (Then, research some more!) An interesting observation for those of you middle-aged or thereabouts: Reading and learning still work, long after college.

The trick is to make sure you’re diving into the right material and working with the right mentors.

Secondly, find the time. Carve out some precious hours to set up your LLC and S-Corp. Shadow a property manager on weekend mornings.

I’ve got several home inspection contacts from those 50 or so houses in my Rolodex. Maybe they’d let me ride along on a few inspections, and allow me to pepper them with questions?

The main thing, dear readers, is to quite simply go do it. Pack up the distractions, prioritize your time, and put your nose out into the world. This is how opportunities morph from ideas to reality.

Please share your ideas for starting a business after retirement in the comments below.