It’s a fair question. It’s one that he’s asking himself. So let’s find out why.
It’s a Different World
Grandpa (and/or grandma) may not be having the retirement experience that they thought they’d be having, especially if grandpa was the victim of a corporate downsizing a couple of years before he was supposed to retire.
When grandpa started working, corporate ladder-climbing was the norm. He was led to believe that if he worked hard and made all the right moves, he’ be able to work his way up the ladder. In a perfect world, Grandpa would end up in a much better (and higher) position at the company where he was employed by the time it came time to retire.
And, not only did gramps expect to be making a salary that was in line with his experience and longevity at the company come retirement age, he was also counting on having a nice, fat, company pension to live on. You know what happened to pension plans, right?
Another thing that’s different is job longevity; it doesn’t seem to be as important as it used to be. Today’s HR departments almost expect to see short-term job histories among applicants. What used to be perceived as job-hopping is now looked upon as fast-tracking if done right. And, since grandpa wasn’t a job-hopper, (he was a loyal employee with longevity) his resume is looked at in a not-too-positive light.
Then there’s his age. How many employers are enthusiastically hiring 60+ year-old men? (I know; it’s illegal to turn away job applicants because of their age.)
Working After Retirement: Retirement Reality
In 2005, CEO and Founder of Small Business Trends, Anita Campbell, wrote about the changing face of retirement:
“In the U.S., it used to be that someone reached the magic retirement age of 65 and stopped working. Period. Now many more people ‘retire’ earlier, but their retirements are not traditional in the sense of not working. Retirees take jobs from time to time, and they even start and continue their own businesses during their ‘retirements.’ Their state of employment is based not on some grand career plan set in motion 30 years earlier, but rather on their needs and desires this year or this month. If they need the money or if they simply want more challenge and social interaction, they may take a job or start a business. “
In 2013, I’m pretty confident that a lot of the non-traditional retirements we’re seeing have less to do with a want and more to do with a need. In other words, these people need to make money – even though they don’t necessarily want to continue working.
They’re Starting Businesses
The Kauffman Foundation, in its 2009 report titled, The Coming Entrepreneurship Boom, stated that the highest rate of entrepreneurial activity belonged to the 55-64 age group. The report goes on to state that the average age of technology company founders in the United States is a surprisingly high 39 with twice as many over age 50 as under age 25.
But, they’re not all starting technology companies. Some of them are buying franchises.
The Franchise Way
Buying into a proven business concept (which is what franchising offers) could be the way to go for those that have found themselves out of a job and close to retirement age. And, while franchise ownership has its risks, it has numerous advantages, too:
- Proven concept
- Proprietary business systems
- Extensive training
- Grand opening assistance
- Powerful technology
- Buying power
And, let’s not forget speed. People that are nearing retirement age (who want to go into business for themselves) need to be able to open up their new businesses quickly. In most cases, new franchise owners can be up and running quickly.
The ROI (Return on Investment) Time Frame
I regularly provide personal guidance to prospective franchise owners who are 55+. While I’m quick to point out some of the advantages of franchising, I’m also very comfortable providing information on the possible downsides of franchise ownership – especially for those that need to get some income going fairly quickly.
I’ve been saying for years that “franchise ownership isn’t for everybody.” One of the reasons that becoming the owner of a franchise business isn’t always the right thing for people has to do with the money. In this case, I’m not referring to the up-front investment. Instead, I’m referring to the return on investment (ROI).
If grandpa invests in a start-up franchise, one that will be a brand-new location for the franchisor, it’s going to take a while to get to break-even. Probably a year. Maybe even more depending on the type of franchise it is. If grandpa needs to collect a decent paycheck early on, he’s going to rapidly become frustrated if he chooses to buy a franchise – it’s probably not going to happen.
It’s not that franchising is bad and that it “takes too long to make money.” It’s just math. All startups (franchise or non-franchise) need to have revenue. At first, that revenue needs to pay for things like marketing, inventory, payroll, etc. Eventually, there will be enough revenue coming in to pay for business expenses. That’s when a little bit of profit starts to creep in. It just takes a while.
For people who aren’t quite ready or that can’t realistically retire when they planned to, buying a franchise is one option that may warrant their investigation as long as they’re realistic when it comes to earning a paycheck from their new business right out of the gate.
Did you buy a franchise at a late-age? Are you thinking of doing so?
What do you think – should grandpa buy a franchise?
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