Starting a business in your 50s or 60s is exciting, but comes with unique challenges, especially when it comes to managing finances. At Dunn CPA Firm, we’ve seen many older entrepreneurs make financial mistakes that could have been avoided with proper planning and advice. Here, we’ll highlight some common financial missteps made by older entrepreneurs and offer guidance on how to avoid them.
Overestimating the Need for a Large Initial Investment
Older entrepreneurs often think they have to make a large financial investment to get their business off the ground. Oftentimes, this leads them to spending a large chunk of their savings to buy or start their business. This approach is both risky and unnecessary.
Contrary to what many people think, starting a business, especially at the micro-business level, does not require a significant upfront investment. Rather than invest heavily at the beginning, consider looking for opportunities to take over an existing business.
Underestimating the Value of Sweat Equity
Older entrepreneurs often overlook the value of simply putting in the hard work and time to build or turn around a business. By approaching struggling business owners and offering to take over their operations, you can often acquire a business with little to no upfront cost. The key is to manage the business better than the previous owner, which can often be achieved with the experience and maturity that come with age.
Overlooking the Risk Factor
It is easy to get caught up in the excitement of starting a new business, but older entrepreneurs need to be especially mindful of the inherent risk associated with starting a small business. Conduct thorough research, seek advice from financial advisors and other professionals and make sure you have a solid financial plan. This will help you make informed decisions that will protect your finances.
Reach out to our team today
Starting a business later in life can be incredibly rewarding, so it is important to avoid common financial mistakes that could hurt your success. Our team specializes in helping entrepreneurs of all ages navigate the complexities of starting and running a business. Whether you need advice on managing finances, structuring purchase agreements or minimizing your risk, we are here to support you. Reach out today to learn how we can help you achieve your business goals and protect your financial future.
Video Transcript:
Especially, uh, those in their fifties and sixties with a little money is that, that I see the mistakes that they make is, um, that they think they need to spend a big chunk of money to get going and, um, to, to either buy, you know, to buy or start up their business. And, um, and that’s just not true. So again, these are micro, this is at the micro business level.
Um, most businesses that you would see out there or run into, um, Uh, probably are for sale. Most are probably not successful. You have to realize this. Most will close without ever being sold. And, uh, so, um, you can either repli start, start a business and replicate what you see. Uh, or you can approach people and just, you know, really buy their business for not very much.
Uh, because it’s not, they’re not running it correctly because it’s It’s almost always not working because it’s not being managed correctly by the owner. You can just take it over from them. Take them away from the pain that they are, extreme pain that they are experiencing and they’ll just give it to you.
So it doesn’t really take very much to get, to get going. If you do buy a business for something, uh, the best way to do it is to just pay for it out of the future sales proceeds, a percentage of whatever subsequent revenue comes in. So that both parties have a big interest in making sure the sales are there and the business grows.
Uh, because the seller won’t get paid unless the business performs. So, and, and then they can maybe get a little bigger number at the end of the day. And that, that payout every pay, those payments every month for years and years. is a little bit of retirement income possibly for the seller. So it’s pretty tough to get.
You can get loans, but you’re going to have to have assets to back them up. Again, if you don’t want to put your limited assets at risk, because owning a small business is risky.
