Successful Aging: Why older people are starting new businesses — and succeeding
Q. I am over 50 and some of my newest entrepreneur partners are in their 60s and 70s. Their breadth and scope of experience is phenomenal. Is this common? I keep thinking that entrepreneurship is with the young folks in Silicon Valley. L.B.
Your experience validates the prevalence of older entrepreneurs. The media tends to describe entrepreneurs particularly those who are tech-savvy as being in their early 20s. That’s not the case. The highest rate of entrepreneurial activity in the U.S. is among those 55 to 64 years, according to The Kauffman Index of Startup Activity. That’s been the case for the past 15 years, writes Elizabeth Isele, CEO of the Global Institute for Experienced Entrepreneurship.
There is more validation to what you have observed. According to a Merrill Lynch study, people who did not like retirement were three times more likely to be entrepreneurs and small business builders than young people. Eisele notes that these people optimized their life and work experience and built everything from simple craft companies to multimillion-dollar technology businesses.
So what are the reasons that older folks are starting their new businesses? Some have lost their jobs and cannot find another comparable position, feeling pushed to become an entrepreneur. However, that’s the minority as reported by about six percent of a sample of 2,700 current and aspiring small business owners, according to a survey by Guidant Financial and LendingClub. AARP indicates the most important reason for men to become entrepreneurs is to be their own boss; for women, it is the desire to follow a long-term passion. Note, these are generalities. Other reasons include dissatisfaction with the corporate world, not wanting to retire and just seeing a golden, irresistible opportunity. A best guess for becoming self-employed in Southern California is to eliminate or shorten the commute on our favorite 110, 101 and 405 freeways.
There still is the notion among some that older adults are a burden to society particularly in referring to our aging population as a “silver tsunami.” Tsunamis are devastating; data counteracts this notion. Older entrepreneurs contribute more than $120 billion in federal taxes annually that support federal programs, reducing dependency on entitlements. This excludes the billions of dollars they contribute to state and local taxes.
And older entrepreneurs stay in business longer than younger ones. With five years in business, 70 percent of ventures created by older entrepreneurs were still operating compared to 28 percent of their younger counterparts. Experience clearly is a plus.
We cannot disregard income as a major motivator. Baby boomers were the most likely to lose their investment money during the 2008 recession with many needing to postpone retirement. If they lost their job and could not find another one that was comparable, entrepreneurship became a necessary option.
Several years ago, I facilitated a workshop on senior entrepreneurship that was attended by middle-age and later-life folks interested in the topic. I asked them about their major concerns. Among them was having enough financial reserves to live as their enterprise likely would not earn sufficient income in the first year or two or more. The second was the realization that their new endeavor might demand a 60 or more-hour week, meaning long hours and hard work. The third was concern about their relationship with their spouse or partner, knowing that being a successful entrepreneur would require them to be fully occupied and somewhat unavailable. They concluded that having support from their partner would be critical to success.
Resources exist. Isele established the Experience Incubator® designed to translate 50 and more years of experience into the skills and mindset to develop a business. See experieneurship.com/programs/experience-incubator/. Coaching for boomer entrepreneurship can be found with Jeff Williams, creator and coach for Bizstarters.com that offers an online planning program with tele-coaching. Williams started his business on his dining room table. A model based in New York City is from Senior Planet. This nonprofit resource for those ages 60 plus helps older adults become savvier about technology and online marketing by offering courses, business incubators and work-sharing spaces.
L.B., Thank you for your good question. Your observation is right on. Senior entrepreneurship is becoming increasingly common and an economic asset to our society…and more.