Creating Your Own Business
At age 40, Col. Harland Sanders operated a service station in Corbin, Ky. where he began cooking chicken dishes for traveling customers, eventually perfecting his “secret recipe” nine years later. But by 1955, at the age of 65, Sanders’ restaurant had failed. With nothing left, he took $105 from his first Social Security check and began visiting potential franchisees. He found success with the franchisee model and in 1964 he sold the Kentucky Fried Chicken corporation for $2 million. Sanders continued collecting Canadian franchisee and appearance fees to solidify his income and savings, and later used his stockholdings to create the Colonel Harland Sanders Trust and Colonel Harland Sanders Charitable Organization. He lived to be 90 year old.
The economy hasn’t been kind to older workers. Although the overall unemployment rate for people age 55 and older is slightly lower than the national average, older workers are often unemployed longer. With existing jobs scarce, many 55+ workers are creating their own. Becoming a business owner later in life has its advantages: you have skills and experience you may be able to market on your own. You also have the benefit of observing gaps in your industry that a small business could fill. And unlike younger entrepreneurs, you may have greater financial resources at your disposal – which is why starting a business in your retirement years holds greater risk than it does for those in their 20s and 30s. You have less time to financially recover should your business fail.
A thorough business plan and a retirement plan are recommended to help you fulfill your dream without betting the farm. Both plans need to consider best and worst case scenarios. Your business could succeed wildly, creating unforeseen tax, estate planning and succession issues. Or it could fail, creating a different set of problems. Your plans should set some automatic action points – the point at which you would sell the business at its peak value or the point at which you would pull the plug when you are finally ready to retire.
If you are considering becoming a business owner, you may want to consult with a Certified Financial Planner who can work with your attorney, business accountant and insurance professional to help you plan your course of action. You may also want to consider finding a mentor with business ownership experience, preferably in your field.
Top Rating – Thirteen U.S. states have a higher credit rating with S&P than does the U.S. government (source: S&P, BTN Research).
Do They Or Don’t They? – Fifty-eight percent of more than 2,500 Americans surveyed in July 2012 believe that “upper income” people do not pay their “fair share” of federal income taxes. From 2009 tax data, the top 5 percent of U.S. taxpayers pay 59 percent of all federal income taxes (source: Pew Research Center, Internal Revenue Service, BTN Research).
Quit Too Soon? – The headline in the business section of the USA Today newspaper on Thursday Sept. 2, 2010 (i.e., two years ago), was “Shellshocked investors quit the (stock) market.” In the 100 trading days prior to the article’s release, the S&P 500 was down 9 percent (total return). In the more than two years since the article’s release, the S&P 500 has gained 38 percent (total return) (source: BTN Research).