7 Major Mistakes Retirees Make Looking To Start A Side Hustle

You have time. You have the desire. And you have a few extra dollars to spend. Starting a business in retirement seems like child's play.

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

If you want to know these pitfalls before you fall into them, take a look at what these entrepreneurs reveal about the most common mistakes retirees make when starting a new business.

Mistake #1: Taking too many risks

That's a big deal. This is the most misunderstood aspect of starting a new business. Entrepreneurs do not take risks; they take calculated risks. 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 person over 50 interested in a small side business can do is take too much risk, especially for something they're not prepared for," says co-founder James Connolly and CEO of Villa Homes in San Francisco. . "It's important to continue investing for retirement (at age 50 or even 60 or 70, hopefully there's still a long-term horizon) while having an appropriate safety margin to protect savings. "

It's probably a good idea to think of starting a new business at this point in your life as a gamble. That doesn't mean you won't be successful. There are many examples of successful entrepreneurs who started new businesses in their 50s, 60s, or even 60s. Nevertheless, you should treat this the same as when entering a casino. Know how much money you can afford to lose and unplug once you hit that threshold.

"One thing you shouldn't do is risk your retirement nest egg on risky business ventures," says Lamar Brabham, CEO and founder of the Noel Taylor agency in North Myrtle Beach, South Carolina. “By definition, all business ventures involve some degree of risk. Never 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 company in which you have no experience

Speaking of money, one of the biggest startup gimmicks is convincing naïve aspiring entrepreneurs to "buy" a pre-formatted business model that they can just add water to and, voila, a instant business.

No. It's a scam. Denis Litvinov, co-founder of FunCorp and CEO of Limassol, Cyprus-based Yepp, says it's a mistake "to invest a lot of money up front before really trying the new venture".

But even if you don't invest money, stepping into a business where you have no experience can lead to problems.

"One of the biggest mistakes retirees make is starting a business in an area in which they have no expertise," says Gerald Grant III, financial adviser at Equitable Advisors in Miami. “For example, they may want to open a local retail store or buy rental properties and end up losing funds because they don't have enough experience in those businesses. One way to do this successfully is to partner up or work for someone in these areas to gain experience before doing it on your own. »

Mistake #3: Doing it just for the money

On the other hand, prioritizing money can lead to another kind of problem.

“Another mistake retirees make is doing it just for income,” Grant says. "It's important to make sure that whatever you invest, you have a passion and a reason for doing it that is more than just making money. Often retirees underestimate the level of involvement associated with small businesses. Many believe that they can start a small business and the income will come without too much work, and unfortunately, this is not the typical outcome. These opportunities can be very demanding and ha...