Retirement: Starting a business after retirement is good on paper, but pitfalls are many
We tend to take networks and relationships developed at work too seriously. If the new venture relies on drawing on this network, there may be a shock after retirement. There is truly nothing personal about this network. Except for a smaller tighter circle of peers who may have shared personal experiences, the others won’t matter much. The others will move on with their work lives and may not be willing to extend themselves beyond minimum courtesies. There are no more favours to grant or take, nor is the power associated with the position alive. My friend will perhaps get appointments to make his pitch; but getting clients and orders and actual revenue is another thing altogether. Every business pursues what it sees as important to its revenue and profits. Retired entrepreneurs tend to have a macro perspective that identifies what might be good for a business.
Many business ideas at that stage of life are not opportunistic; they tend to be idealistic. They want to fill a gap; they want to make things better; they want to contribute to society; they want to enable a new approach and so on. My friend was so absorbed in the nobility of his idea, that he was unable to see that his clients may not have the time, energy or the urgency to invest money in his proposition. One can argue with a business head that he must do this or must do that. But B2B clients are the toughest to crack as they do not allocate funds easily if the proposition does not make immediate business sense or may not deliver what they need. What is also stacked against my friend is that he may not have the energy or the bandwidth for a B2C (business to customer) venture that may need large scale investments in marketing, business promotion, equipment, space and so on.
That needs creating and collaborating with a large team, and needs business partners that bring various other skills to the table. Preparing ahead makes sense if the venture is big, specialised and needs a larger team, capital and infrastructure. Leveraging the work years when one is able to reach out, check, test and debate business ideas, can help one transition from work life to entrepreneurship. This can happen at any stage of one’s work life. The disadvantage of thinking about it after retirement is that the benefit of this high quality collaboration may simply not be there anymore.
There is also the problem of lack of performance orientation. Many retired individuals tire of chasing targets and goals and prefer to take on work that does not require stringent achievement of quantitative targets. They desire flexibility in their work lives after several years of routine and regimen. Entrepreneurship calls for long hours, focus on revenue, costs and profits and a level of discipline that not many are unwilling to invest in at that stage of their lives. Not for want of ability, but for want of a burning desire to succeed, perhaps. The stakes may not be high. If entrepreneurship is sought for filling up the time one has on hand, that is not sufficient condition for succeeding.
What works for a retired entrepreneur? Individual excellence is the capital that the retired person holds. Where he started his career is where he would end it. Beginning as an individual contributor and performer, a new employee begins to climb the ladder learning to collaborate, execute with the team, lead and direct larger and larger teams and hold positions of power and strategy. At retirement, one reverts to a much better qualified, experienced and skilled individual contributor. With perspective, knowledge and wisdom and if the eagerness to contribute to a cause remains, our man is ready to seek opportunities.
Retired individuals thrive in advisory, consulting, mentoring, teaching and writing roles for example. As long as businesses that engage them are able to pay for these specialised services, there is money to be made. Professions such as medicine, research and writing that hinge on individual excellence do not see retirement as a threat. They continue to be paid for what they have done all along.
My friend complained that I was being harsh and perhaps generalising and he was right. Not all doors close shut immediately; and not all propositions die without finding clients. We decided to do a quick poll of our circle of recently retired friends asking them to share their own experiences and that of others in their circles. We got some interesting stories.
Not surprisingly, many were approached to become insurance and real estate agents. Some considered becoming financial distributors and investment advisers. Individual contribution: check. Relevant to business: check. Performance based pay: check. A significant number took to stock trading, which should fall in the bucket of individual performance. Some ended up being advisers and consultants to vendors, clients and others associated with their earlier employer. Some took to teaching and were delighted with the number of assignments and the payments. Some wrote books, columns and content.
My friend did not cede too easily. He is determined. So what was he planning to do? He likes to identify, recruit, train and certify entry level candidates for his erstwhile employer. When I tell him that turnover is too high at that level and that businesses won’t invest too much, he thinks I am jealous and suspicious that he will succeed.
I recall a meeting with a large bank’s HR head who described the branch expansion spree. Does it lean on the mushrooming training businesses, I asked. As long as they get me the number of people I need, he replied. Such is the distance between what a business actually wants and what others think it must need.
(The author is CHAIRPERSON, CENTRE FOR INVESTMENT EDUCATION AND LEARNING.)