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Thread: Working After Retirement - Thinking out loud

  1. #1
    Join Date
    Feb 2003
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    Conway, Arkansas
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    Working After Retirement - Thinking out loud

    Well, I've talked to my new financial advisor. I've lost a lot of money over the past several years and I am currently advised that I'll need to bring in about another $2K per month to support my life as it stands today. I "want" to start doing some type of business in the woodworking area and my heart is wanting to get into CNC work for signs, crafts, and many other things that come across this brain of mine. I have about 6 years left before I will retire, so I have time to get setup and learn what I need to learn. My real problem is that I don't know how to get started and if you say all you need is money, I'll scream!! I know I need money, but I need to start somewhere and I sure don't know how to run a business but I do know woodworking. Woodworking and refinishing has been my passion since I was 14 years old. I've been good at it and I've taught a few others how to do woodworking basics.

    I'm looking for your advise, pointers, tips, and here's how to get started kind of things.
    Please? and Thank you.
    Thanks & Happy Wood Chips,
    Dennis -
    Get the Benefits of Being an SMC Contributor..!
    ....DEBT is nothing more than yesterday's spending taken from tomorrow's income.

  2. #2
    Join Date
    Jan 2018
    Location
    Vancouver Canada
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    716
    I suggest you take a few courses at a local college or night school on business matters.
    They’ll get you started on accounting, sales, writing a business plan etc.
    Go see your bank. Usually they have a ton of helpful people for starting a business.
    Try contacting a local chamber of commerce branch, ask around at your charitable places you donate time and and money to.
    That will start you off.
    Remember, as you approach retirement age, you have less energy. Take time to enroll and maintain a steady excercise program.
    Young enough to remember doing it;
    Old enough to wish I could do it again.

  3. #3
    Join Date
    Feb 2003
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    Los Angeles
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    Looking forward to the replies, I retired two years ago,but. Need about 2K per month additional to be really comfortable.

  4. #4
    Join Date
    Nov 2006
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    NE Ohio
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    I sure don't know how to run a business
    SCORE - Service Corps of Retired Executives - https://www.score.org/ they can help you head in the right business direction.

    If you don't already have a good accountant that does your taxes, then find a good CPA to help you with the tax end. They should steer you in the right direction as far as LLC vs just sole ownership. Don't just jump right into a LLC thinking it will "protect" you. Once you form a corporation, then everything related to it becomes more expensive - insurance, taxes, tax preparation,,etc. Lll for pretty much nothing because as the sole owner/chief executive of the LLC, you are still open to the same liability as you would be as a sole proprietor in many, many, many locations.

    Talk to your insurance agent about what type(s) of coverage you need and what should be covered.

    If you don't already have one - get a good lawyer. One that knows business and tax laws.

    Plan to spend an entire day going over the small business web site. https://www.sba.gov/

    Tons of information there - tons of funding information there also. (not to cross any political boundaries - but - the present administration is very friendly to small businesses right now- so take advantage of it)(OTOH - the previous administration was very friendly towards minorities and women when it came to small businesses - I investigated forming a LLC and putting it in my wife's name as a source of funding)

    Lastly - find a niche and fill it...

    Good luck! I'll let others give you better advice on the actual mechanics.
    Keep in mind that most business attempts fail on the bookkeeping an/or legal - - or the customer relations end, not the actual workmanship end.
    My granddad always said, :As one door closes, another opens".
    Wonderful man, terrible cabinet maker...

  5. #5
    Join Date
    Jan 2008
    Location
    Western Nebraska
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    4,680
    Having been self employed nearly my entire working life, I'd suggest taking that time you have between now and business opening to plan everything. If you need to borrow capital, you'll need a banker ready business model, if you don't you'll need one for yourself. If you understand how the money should be flowing in and out of your business, you can tell when it isn't before it's an unsolvable issue.

    Some expensive lessons I've learned, keep compliance costs as low as possible by minimizing the regulations you fall under. For example, some woodshops here require a full fire sprinkler system, some don't. If you need one, the costs of your product just went up by the $ it took to install, which your more clever (in my case) competitor likely doesn't have to pay. It's based on number of full time employees working in the shop, so simply structuring a business as a one man show saves $50k.

    I agree with Rich about the tax and attorney pros, with a caveat. You are looking for $24,000 net, it's really easy to double that in a year to pay an attorney and CPA. I recommend having an attorney help you form the business, here it cost about $1000, which will get you a federal tax ID and state level licensing. Also you'd get an "articles of incorporation" and a "banking resolution", which you will need if you want to do any business banking, like checking accounts or loans. Beyond that, keep on the attorney's good side, and call him if you need, but try not to. I'd recommend tracking your own finances with quickbooks or similar, and monthly reporting to a CPA. He won't charge as much that way, and he can help avoid tax pitfalls as you go. Let him file the returns, that way when you do get audited, you have a pro handling it. You will be audited.

    There is another way that plenty use, which a cash type business that operates on the ragged edge of the governments oversight. It's possible to do, but in my experience, it is a full time job in itself keeping the government out of my business. It's arguably easier and more profitable to give in to the system and pay the fees. You'll be shocked how many different agencies are counting on you for revenue.

  6. #6
    Join Date
    Mar 2003
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    SE PA - Central Bucks County
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    Your first step is to sit down with a local accountant that specializes in small businesses to determine how best to setup your business to provide maximum benefit from its legal structure relative to liability and tax advantages. If you do this right, the cost for setting things up may be largely balanced by how taxes are handled, but it has to be done correctly, especially with the recent changes to tax laws. By handling things this way, you may be able to see how doing what you want to do is actually possible financially. You may want to do this sooner, rather than later, relative to setting things up, so that you can balance the costs/tax benefits against the higher taxes you pay now at full salary, too. You'll also need insurance, which is fortunately pretty reasonably priced. My business ended up being best handled as an S-Corp for tax purposes and woman owned. With no employees, I was able to opt out of PA's Worker's Compensation program as an officer. Professor Dr. SWMBO is the CEO and although it's "my business", she's been actively promoting it through the huge communities she's part of "out there".

    While your time is more limited at present, having the business setup properly will allow you to start slowly, learn any new things you need to learn and work comfortably through your business and marketing plans before it becomes "essential" that the business is bringing in revenue. Certain costs go to the business, too, rather than your personal pocket. (yea, they sorta are the same at first, but not for tax purposes) The marketing is what is been the biggest challenge for me in this past year since retiring. "Finding my niche" and building things up is what I'm having to focus on every day at this point. You'll want to put an actual accounting system into place, too, even while it's "very part time". Record keeping is really, really important.

    I have no doubt you'll be successful as you are an excellent craftsman and care about doing quality work. Pick your customers carefully in that respect. Do as much B2B as you can get. Consider alternative channels for things you can sell "in between" commissioned/contracted work...I'm doing that with ETSY and actually making some sales while keeping my CNC machine running daily.
    Last edited by Jim Becker; 12-05-2018 at 9:16 AM.
    --

    The most expensive tool is the one you buy "cheaply" and often...

  7. #7
    First, you need a business plan. How much will it take to get started? What is the market? Can you compete with big commercial outfits? How do you reach the market? What are you going to charge? What are the expenses for equipment, licenses, insurance, etc.

    I wouldn't blame you for being a bit scared of the replies so far. You can start out very small and build from there. Depending on your area and regulations, you may be able to start out in your home shop and avoid a lot of expense.

    I know of one guy who started his business (not ww'ing related) entirely with Facebook and a Webpage. This is something I think is the first order of business.

    I suggest have a professional web designer do it for you and pay Google for some advertising. Build a portfolio of work and post it.

    You're going to have to invest to get started you have to weight the risk/benefits of that, too.

    Think about what $x/month is based on. That can drive a lot of anxiety and stress. I would see a Certified Financial Planner before you do anything. Now is the time for that. Find an independent person that is not affiliated with an investment firm.

    The investment corporations are the ones who came up the idea you need $1M in savings to retire.
    Last edited by Robert Engel; 12-05-2018 at 9:42 AM.

  8. #8
    Join Date
    Sep 2009
    Location
    Medina Ohio
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    I see you say you would like to make signs, crafts and other things. Are there other signs shops around? Crafts are ok but sometimes they are not profitable. Around me there are so many sign shops that it would be almost impossible to break into the business I ended up using my CNC and Laser to cut for the shops that do not have that ability.

  9. #9
    You might want to look at information which is available for hobbyist CNCs, even if you get a higher end machine --- the concepts are the same and transfer well, and for folks on a budget, the hobbyist CNC machines can work out well.

    I'd like to think that everything you'd need to know is on the Shapeoko wiki, but if you have a question which isn't answered there, I'd be glad to help you research it.

    One notable resource is the "Guerrilla guide to CNC machining, mold making, and resin casting" (should pop right up on a search, as should the shapeoko wiki)

    ob. discl. I work for Carbide 3D which sells the Shapeoko 3 and Nomad 883 machines.

  10. #10
    I read an article by a guy who had retired and started making cutting boards and selling them locally. It grew to the point it became a full time job. The problem came when demand exceeded his desire to make them. But he was making so much money he couldn't walk away.

    Not sure if this is the kind of thing that interests you, Dennis, but making small items and see how they sell can keep the startup costs low and you can learn how to best run the business as you grow.
    “Travel is fatal to prejudice, bigotry, and narrow-mindedness..." - Mark Twain

  11. #11
    Join Date
    Apr 2010
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    Berkshire County in Western Ma
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    Market Research at the top of my list, which is all part of a business plan. You need to be doing what people want to either buy, or pay to have done. And it has to be something that either no one else is doing, something that you can do better, or something that has room for more like businesses. As far as the better part, there is often a market for different qualities of the same thing.
    When I was hired to write a book on building beekeeping equipment, I had to see what books were already out there, where they were being sold, who the target audience was, price point etc.
    Just in the town I live in, many small businesses have come and gone, and some had obviously not done the research or had a good business plan. One reason they failed was they assumed that everyone would have the same passion for what they were offering as they did themselves.
    Find a niche. Think "Frank's Cranks"
    I know someone who wanted custom drawer pulls and knobs for their cabinets, then turned it into a business because they knew there was a market.
    Another business that recently moved here from out west offers specialized variegated yarn. The woman could never find quite what she wanted so she started dyeing her own and found there was a big demand.

  12. #12
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    Apr 2010
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    Berkshire County in Western Ma
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    200
    The other option is lower your standard of living to mine and you can live on 2 grand a month for the most part.

  13. #13
    Join Date
    Feb 2003
    Location
    Conway, Arkansas
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    Ok, great info from ALL of you so far. All of my equipment that I currently have is paid in full. I have an 1,800 sq ft shop. Most every tool I have is commercial quality tools. I've been collecting and upgrading tools/equipment for over 35 years. I've repaired antiques, refinished antiques, repaired and refinished chairs, upholstery work, built kitchen tables, benches, bedroom furniture, beds, chest of drawers, dressers, blanket chests, and more. I've never been an assembly line type shop. I've even built over 300 bee hive boxes for a buddy of mine getting into the bee business. I know how to do the work and I love using computers and woodworking tools. The idea of designing and CNC appeal to me and I've been thinking this over for a few years now.

    Locally, there are 4 colleges (under 25 miles from me) and 2 hospitals. Not to mention businesses galore. I live in a city of about 90,000 people. Maybe I'm trying to think too much on the money making side to supplement my tiny retirement income. I'm paying off personal debt like crazy and my hope is to be totally debt free in 5-6 years, to include my house. I know a lot about stuff but I'm no real expert at any of it. Once I turn 60, I can go to college here for free, I just have to pay for books. My plan is to take some business courses to better educate me about this very topic.

    Maybe I'm thinking too big...I really don't know. Sometimes I feel desperation building in my mind but I do know that I have a professional I.T. skills that I can lean on while I'm trying to get setup to make stuff in my own shop. My preference would be to work business to business but I don't know enough yet to even make that type of choice.

    I've often wondered how people get started in business. I think...how did they come up with the money to even get started? Did they save it for a while or did they borrow? Did they come into an inheritance that gave them the money to start? I asked a local millionaire about how he started a business and he said....."ya gotta know somebody that has money and that trust you enough to lend you the startup money". Well, that shut my door right there.

    Maybe I'm thinking about this all wrong. I truly just don't know.
    Thanks & Happy Wood Chips,
    Dennis -
    Get the Benefits of Being an SMC Contributor..!
    ....DEBT is nothing more than yesterday's spending taken from tomorrow's income.

  14. #14
    Drawing up a business plan is great for some businesses. I know a few who fell into opportunity and grabbed on with both hands and some became wealthy. One guy had a 5th grade education. Went to a small livestock sale and purchased some calves cheap to raise up for meat for his family. He was told that one of the calves was worth about 5 x what he paid for it at another large livestock sale 100 miles further west. So he checked the livestock market and found it was true. He drove that calf the hundred miles and got a check 3 days later for 6x what he paid for the calf. So he went to small livestock sales buying holstein heiffer calves and every tues drove them to the large livestock sale where he sold them for a lot more. He did that for 25 more years. suddenly going from a part time janitor in a school to making six figures a year. That's when he needed an accountant to show him how to set up and keep his books. A lady I know buys things at yard sales and flea markets and sells them on line. She knows what she can sell and for how much and sticks to that she is not getting rich, but she is paying her bills. Another guy I know made a business out of buying work shop machines, stripping them for parts and selling the parts on line. He makes more than he did when working before he retired. The classic example is the guy who charges chicken farmers to clean the manure out of the big commercial chicken houses and then charges other farmers to spread the fertilizer on their fields. It is certainly possible to make a hobby into a paying business. It is difficult to do it on the scale you say you need. Too many guys have the same idea. especially it seems for wood turners. I know one that does it successfully as a business, and he is a speed demon at what he does. He needs to turn out volume to offer items at a price people will pay. I have seen turners set up to sell bowls for $100 that were worse than average. It has to be special, very special to sell for that kind of money.
    Last edited by Perry Hilbert Jr; 12-05-2018 at 12:22 PM.

  15. #15
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    Dennis, I don't think you are thinking too big at all! Relative to financing the business, while having cash is a nice thing, if you do your homework, have a business plan and set things up optimally with your accountant, you really can use "other folks' money" for any additional capital equipment you want balanced by tax advantages. IE, you're paying tax now, so if you can shift that same money toward the business to cover some or all of your startup cost, you can do things without having a huge pile of money. That's one of the reasons that working with a qualified and competent small business accountant is so essential. I'm not in any way suggesting that anyone go deep into debt to start a business! But there is "good debt" and "bad debt". Making the first one work for you is all I'm saying is a potential way to get this thing done and again, if you time things while you have your current higher income, your end-state out of pocket could be reduced substantially. It's a numbers game that really needs good advising on the accounting/tax side.
    --

    The most expensive tool is the one you buy "cheaply" and often...

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