Trending – Retirees representing over 30% of Australia’s successful start ups each year!
Retirement can be a time to kick back, relax and enjoy the fruits of your labor. But with longer life expectancies and the increasing cost of living, many retirees are seeking ways to extend their income, whilst keeping active. An increasing number of Australians over the age of 50 are doing just that, by starting their own business, and research shows that they are achieving great business success.
|Australian mature-aged entrepreneurs contribute $11.9 billion per annum to the Australian economy in over 379,000 businesses, they launch approximately 14,000 new businesses each year and actively contribute to fiscal, social, health, and active ageing outcomes in their communities. Thirty-four per cent of all young businesses in Australia are now led by mature-aged entrepreneurs, identifying mature-aged entrepreneurship as the fastest growing sector of entrepreneurship.*
So, what are the reasons that many older Australians are having high levels of success when starting a new business?
Industry and life experience
Not only do more senior people have professional experience from their working life, but they also have great life experience. These kinds of experiences mean that they may be better in identifying and evaluating business opportunities.
With years behind them of building networks and connections, older Australians have a big advantage. Large personal, social and professional networks are paramount to business success.
Older business owners are more likely to be able to self-finance than younger business owners. A majority of people in this cohort have paid off their mortgage, do not have children to financially care for, and have worked and saved for many years. This can make it easier to start the business by reducing capital costs, risk and stress. As well as this, a stronger financial position means the business is less likely to experience financial constraints, making business growth easier.
Positive mindset and motivation
Older entrepreneurs are less likely to be motivated by money alone. Instead, they’re more likely to be driven by a desire to solve a problem or create value for their customers. Senior entrepreneurs often have greater self-belief and persistence – two traits necessary for a successful business.
Retirement often provides individuals with the time and freedom to explore their passions and interests. Starting a business related to a hobby or personal interest can be a gratifying way to spend time and make money simultaneously.
It’s not all sunshine and roses however, there are important considerations to make before actioning a business idea or start-up. Before you take any action, this is the imperative time to discuss your ideas with your Accountant or Financial Planner!
If you’re feeling motivated – here are some key tips to keep in mind when you’re weighing up the pros and cons of tapping into your entrepreneurial potential…
- Do not use all of your retirement savings for startup costs
No matter how sure a bet you think your new business idea is, DO NOT use a large portion (or all) of your retirement funds. Over 50% of new businesses fail for reasons outside of the business owners’ control. So only use a small portion of your retirement income, and be prepared to lose it all. You may not lose it but you need to be financially secure if you do lose.
- Learn new technology
Business technology is rapidly changing. It is important to keep up with advances and learn how to use tech to help your business succeed. Take time to learn about computer usage, the internet, and software. Attend classes at your local colleges, libraries, or take courses online.
- Consider your pension
If your business is successful, it may affect your Age Pension or other benefits, and you could find yourself in a difficult tax situation. before you commit money to any project.
- Being self-employed means no sick leave, holiday pay, or automatic superannuation contributions
Make sure you’re putting money aside so you can take time off, keep up with the cost of living, and retire comfortably when you’re ready.
If you’ve got a bright idea that you’re passionate about, the team at Highview strongly recommend you speak with a professional for advice – either your Accountant or Financial Adviser before taking any action. In some cases taking up a new hobby like golf could be more suitable! 😊
*Source: Sage Journals – Independent Worldwide Research Resource – Entrepreneurship and self-employment for mature-aged people – Alex Maritz, Bronwyn Eager, Saskia De Klerk, 2021 (sagepub.com)