Budding entrepreneurs should take care of their redundancy payments

With many firms downsizing there are many people, often in their late forties or into their fifties who find themselves unexpectedly with time on their hands and also a fat cheque as part of their compensation package. Some may have several tens of thousands in their bank accounts.

Few are happy to retire and put their feet up. Spending more time with the family may be a convenient euphemism for politicians who have been kicked out of office, but actually for people with active minds, boredom soon sets in. It is then that there is a danger of being lured into something which may eat some or all of that redundancy payment without any lasting benefit.

There may be an attractive offer for a franchise with “guaranteed income”. There may be an alluring advert in a weekend newspaper offering training as a “consultant”. There may be an offer of high returns from a property business. All should be viewed with perhaps not suspicion, but at least with healthy scepticism.

If you are looking at an opportunity to start a business:

• Think whether it would suit your skills
• Consider whether you can meet the demands on your time
• Ask for references from other people who have gone down that road
• Check that the income suggested in the blurb is being received by those other people (they may be embarrassed but if they are you have your answer).
• Consider whether any turnover-based levy from “Head Office” will eliminate any profit unless you work 24/7.
• Remember that if something seems too good to be true….

You may find just the right thing, but do be very careful and choosy. Keep your money until you are absolutely sure you are doing the right thing. Remember that very plausible scammers roam amongst us. Have you tripped over any?

(C) Jon Stow 2010