7 Major Mistakes Made By Retirees Looking To Start A Side Hustle

getty You’ve got the time. You’ve got the desire. And you’ve got a few extra bucks to spend. Starting a business in retirement sounds like a piece of cake.

Don’t be lulled into a false sense of security. There are many ways to trip yourself up. And the downside isn’t just a failed business; it’s a failed retirement.

If you want to know these traps before you fall into them, take a look at what these entrepreneurs reveal about the mistakes retirees most often make when starting a new business . Mistake #1: Taking too much risk

This is a big one. It’s the most misunderstood aspect of starting a new business. Entrepreneurs don’t take risks; they take calculated risks . Quite frankly, you don’t have the runway length to land safely if you place too big a bet in your retirement years.

“The worst thing a 50+ person interested in a small side business can do is to take too much risk, particularly for something they are unprepared for,” says James Connolly, Co-Founder and CEO of Villa Homes in San Francisco. “It’s important to continue investing for retirement (at 50, or even 60 or 70, there’s still hopefully a long time horizon ahead) while having an appropriate margin of safety to protect savings.”

It’s probably a good idea to think of starting a new business at this stage in your life as a gamble. It doesn’t mean you won’t be successful. There are plenty of examples of successful entrepreneurs who started new businesses in their 50s, 60s or even their 70s. Nonetheless, you should treat this the same way you do when you enter a casino. Know how much money you can afford to lose, and pull the plug once you hit that mark.

“One thing you must not do is risk your retirement nest egg on risky business ventures,” says Lamar Brabham, CEO and Founder of Noel Taylor Agency in North Myrtle Beach, South Carolina. “By definition, all business ventures carry a certain amount of risk. Don’t ever risk more than you are willing to lose. Most small businesses fail, and you don’t want to ‘have’ to go back to work because things didn’t work out. Plan for the worst and hope for the best.” Mistake #2: Choosing a business you have no experience in

Speaking of money, one of the biggest start-up gimmicks is to convince naïve entrepreneur wannabes to “buy” a preformatted business template they can just add water to and—voilà—instant business.

Nope. That’s a scam. Denis Litvinov, Co-founder of FunCorp and CEO at Yepp, based in Limassol, Cyprus, says this is a mistake of “investing a lot of money upfront before really trying out the new endeavor.”

But even if you’re not investing money, entering a business where you have no experience can lead to problems.

“One of the biggest mistakes we see people making in retirement is starting a business in an area in which they have no expertise,” says Gerald Grant III, Financial Advisor at Equitable Advisors in Miami. “For example, they may want to open a local retail store or purchase rental properties and end up losing funds because they don’t have enough experience in those businesses. One way to do it successfully is to partner with or work for someone in those areas to gain experience prior to doing it on your own.” Mistake #3: Doing it just for the money

On the other hand, placing money as a priority might lead to a different kind of problem.

“Another mistake we see retirees make is doing it just for the income,” says Grant. “It’s important to make sure whatever you invest in, you have a passion for and a reason why you’re doing it that’s greater than just making money. Often, retirees underestimate the level of involvement associated with small businesses. Many think they can start a small business and the income will just come flowing in without much work involved, and unfortunately, that is not your typical outcome. These opportunities can be very demanding and hands-on, which is often the opposite of how most retirees envision their retirement.” Mistake #4: Failing to plan

This leads to a bigger question. It’s not just “why” you’re doing it but “how” you’re going to do it. This implies you need to think ahead. And you know what they say about “failing to plan.” It means you’re “planning to fail.”

Don’t plan to fail. Take advantage of the time you have to really think about what you’re going to […]

source 7 Major Mistakes Made By Retirees Looking To Start A Side Hustle