Couple hopes business venture gets them to retirement

Laid off in his mid-50s after a 30-year career in the airline industry, Richard Hoad decided it was time for something completely different.

After scouring several East Coast locations, he and his wife, Jo-Anne, bought a small Cape Cod bed-and-breakfast in East Orleans, Mass., in 2012.

The couple sold their Annapolis, Md., home and a cottage in Canada to relocate and used a portion of Richard’s retirement accounts to fund the purchase. After about a year of living in and running the property, they closed for a renovation and reopened The Parsonage Inn in 2013.

“I’d always dreamed about running a bed-and-breakfast, and this one had been running for 30 years with a good reputation,” said Richard, now 61. By updating the facility, overhauling the inn’s website and adding online booking, he figured, the business could thrive.

Jo-Anne’s cooking skills and penchant for local, mostly organic ingredients were also a big plus, he said, and her family had also run a similar business in England.

Even so, the business incurred losses for the first two years, and the workload was even more onerous than the couple expected.

“We underestimated the amount of work. It really is 24/7,” he said.

“Our (profit-and-loss) statement has been positive the last two years, and we’re optimistic about this year,” he said. “And, hopefully, we’ve increased the value of the property itself.”

The couple hopes to sell the business in another four to five years, using the proceeds for retirement in their mid-60s.

About 10,000 entrepreneurs annually start businesses using a complex strategy known as a rollover as business startup, or ROBS, according to estimates from David Nilssen, founder of Guidant Financial, a company that facilitates the transactions. The Hoads used Guidant to help structure their business.

The arrangements have drawn significant scrutiny from the IRS and typically cost several thousand dollars to set up, but Nilssen says the trend is still hot among baby boomers hitting the end of their careers.

For his part, Richard said he would do it again, but he cautioned would-be entrepreneurs to be realistic about the risks.

“Use a business broker and take in all the advice you can find,” said Richard.

“It’s not for everyone,” he said. “Putting all your eggs in one basket is risky, and I recognized that.”

He spent time going to innkeepers’ conferences, chatting up participants about operational challenges.

“We were naively confident at first but felt that if we did the right things we could make it a success. We were walking out the back door with the paintbrushes from the renovation when the first guests were walking in,” he said. “But, yes, I’d do it all over again.”

This story was originally published May 9, 2016 at 12:51 PM with the headline "Couple hopes business venture gets them to retirement."