Can Buying A Small Business Replace Your Six-Figure Salary After 50?

Can Buying a Small Business Replace Your Six-Figure Salary After 50?
A new CEO came in and removed my boss. I was invited to interview for the role, but another one of my colleagues was selected, so I’m concerned about job security. I don’t think I’m going to lose my job immediately – maybe I have a year – but I’m almost 60, and finding a similar role and six-figure salary will be tough. I spent many years previously working in a lower-paying industry and am just now making a good salary that has allowed me to pay off debt from my low-salary days and build some savings. My financial advisor says I’m on track to retire, if I maintain my current savings rate for another 10-12 years, so I need to keep earning at this level. While I’m still looking for a comparable job, I’m considering buying a small business that cash flows enough to pay me a six-figure salary. I’m in digital marketing and marketing tech (on the people management side, not the technical stuff), and there are businesses which cash flow enough, but they cost several million dollars. I would get an SBA loan, which I would have to personally guarantee, and I have an old friend who would come in as an equity investor to provide the down payment. Is buying a small business instead of working a job a potential alternative? – Older Job Seeker Thinking About Entrepreneurship
There are a lot of different issues facing this almost-60 job seeker, but it’s a positive first step to be wide-eyed and aware of what they’re facing. Additionally, while it may be difficult to juggle a late-career job search and the due diligence around buying a small business, it’s smart to keep both options open until you’re fully decided. If your job feels insecure, it may be tempting to think you can effectively buy yourself a salary by buying a small business, but there are risks involved.
Consider The Financial Risk Of Buying A Small Business
Using An SBA Loan To Fund A Business
Yes, you can get a loan to buy a business, such as from the SBA (Small Business Administration) or from the previous owner who might offer seller financing as part of the purchase. In the case of the SBA, you are personally guaranteeing that loan. In this case, where the target businesses costs several million dollars, that’s a seven-figure loan you would be on the hook for should the business not work out. Even if due diligence before the purchase is your superpower, you can’t predict future market conditions, new technology or processes that disrupt or eliminate your business advantage or simply an overall economy slowdown (another pandemic?) that hurts your otherwise solid business.
Buying A Business In Your Late 50s
It’s an even greater risk in your late 50s because your runway to build the business up or to recover from setbacks is shorter. You might plan to work the next 10+ years, but your health may have other plans. The compound interest that grows whatever profits you can invest (either in the business or into your retirement) doesn’t have as many years to compound. At the same time, you have taken on new debt in your later years when ideally your expenses should be decreasing.
Your Retirement Plan Factors Into Career Decisions
Retirement planning and career planning go hand-in-hand, especially as you get later in your career. You have fewer career moves to make before retirement starts. Therefore, each new move you make carries even more weight, and buying a business is a significant move.