Small Business: Going back into business post-retirement

New Zealand finance author Martin Hawes. Photo / Supplied

Martin Hawes, wealth coach and personal finance adviser, does not believe in the word retirement. He is fully behind people who want to get involved with new business enterprises after their main career ends.

The first thing is it is actually quite common for people to start new careers or businesses after 60. A large number of times I've sat in taxis with retired accountant and engineer drivers, people who have retired, gone home and got bored out of their trees and wanted to go back to some kind of business. I've always been very supportive of this. It gives social and mental engagement and a bit of income.

On the risk side, the business should be small. It should not be capital intensive and there should be no debt. If it is small, in the scope of things, i.e. not more than 20 per cent out of the total amount of a couple's net worth, then I'd be relaxed. And the rest of that 80 per cent should be well and conservatively invested. That way you have on one side, quite a high risk investment in the coffee bar for instance, while the rest of it should be in bonds or something similar.

A common business many professionals take up after they leave their corporate life, is consultancy work. And that makes sense, they do the consultancy connected with their former career. Others, however want a complete change they apply their skills to other industries. In some cases they will do pro bono work, or price themselves a bit lower.

For some they buy a company or start one and, in effect, buy themselves a job. In this case people are often not getting a return on their capital and their time but they are quite happy about that. These people are not looking at building wealth. They are looking for social engagement to get out of the house.

One thing to look out for is that people can get so engrossed in their new business venture that they almost get back to the 60 hours a week they were working before. A cafe can be like that. Also people can get trapped if the cafe does not do as well as they'd hoped. They start working longer hours, put the business on the market and can't sell it, yet they are locked into a six year lease so cannot simply walk away - and that can wreck retirement.

Other downsides are people who have always wanted to run a shop, might find that they aren't terribly good at it or those who have had a corporate career go into a small business and find that they can't just walk down the hall to the marketing or HR department for some advice. You as the business owner hold all the roles in the business there are no specialists for suport.

On the whole though I am very supportive of people doing other things after retirement age. All the research shows the more you stay engaged, the more you carry on using your brain, the better.