Who are the new entrepreneurs? Are they the young, risk taking, technologically savvy 20 to 34 year olds? Are they the more settled 35 to 44 year olds with families? Or are they the 45 to 64 year old baby boomers?
In June of 2009, the Ewing Marion Kauffman Foundation of Kansas City, MO set out to find the answer. A Kauffman report, "The Coming Entrepreneurship Boom," said that the highest rate of entrepreneurial activity for the last 10 years has been among the 55 to 64 age group. The lowest level of entrepreneurial activity was among 20 to 34 year-olds, defying the conventional image of the risk-prone Internet entrepreneur.
"The United States will, at some point, recover from the current deep recession. But the overriding question upon recovery will concern resumption of growth rate," the report said. "Several facts have emerged in the course of Kauffman Foundation research that indicate the United States might be on the cusp of an entrepreneurship boom - not in spite of the aging population, but because of it."
Stunned? Shocked? So were Willow and I until we realized that we are part of that age group. Since this has been the trend for the last decade, it has obviously not been triggered by the current economy and the loss of retirement nest eggs. That is certainly spurring more people in that age group to take the risk of becoming an entrepreneur but there have to be other reasons as well.
What are some of the reasons for this boom in older entrepreneurs? Life expectancy has risen and people are staying healthier far longer. In addition, long term jobs with pensions are becoming a thing of the past. There has also been an increasing trend to force older workers out through layoffs, buy outs, outsourcing overseas, and early retirement so younger, less costly employees could be hired. Employers also had a tendency to believe that only the young could understand and keep up with technology. The merger frenzy during the last decade has also been a contributing factor.
Women were faced with even more challenges. If they had been homemakers, then they suddenly encountered the empty nest. If they were working, they might be stuck in dead end jobs or have hit the glass ceiling. Add to that major life changes such as divorce or death of a spouse or partner, with their personal economic impact, and what might have been a "someday" wish can suddenly become a necessity.
Faced with long years of retirement the baby boomers felt too young and vital to sit on the porch in their rocking chairs. They suddenly realized that they had the time and opportunity to follow their passions, pursue a dream, and be productive. In some cases it became a matter of survival. Remember Colonel Sanders, who at the age of 65 and with the proceeds from a Social Security check, founded Kentucky Fried Chicken?
An even more timely example is that of Julia Child whose name is once more in the forefront because of a new movie. Julia was a fixture in most of our lives since we can remember. However, most people don't know that she was 49 years old before she published her first cookbook and 51 before she first appeared on TV!
Late last year there was an article in USA Today about older entrepreneurs. It was obvious from the article that it bought into the stereotype that seniors don't have the hustle and energy to be entrepreneurs. It dwelt on how time is precious and seniors need to avoid risk. The article definitely had confused quality of life with quantity of life. As we get older, getting out of bed can be a risk. It obviously failed to grasp that we don't feel old; we like the challenges, risks, and problem solving required by owning a business. All those things make us feel younger, keep our minds sharp, and give us the reason to take that risk of getting out of bed in the morning. It never occurred to the author that, with our vast wealth of experience in business and life, we can minimize our risks. We still have a lot to offer and we want to contribute to our corner of the world in one way or another. The article also mentioned the loss of some Social Security if we make too much money as a big risk.
There are serious risks in being an older entrepreneur that are unique and do need to be considered. Taking on a high or long term debt load is not advisable. Many lending institutions won't even make long term loans to seniors for fear the person will die or become incapacitated before repayment is made.
Which makes it interesting that the article suggested that seniors who wanted their own business should look at purchasing an existing business or buying a franchise. Those can be very expensive propositions and purchasing the wrong company or franchise is a big risk. You are also looking at a high debt load over a long term if one could even get financing.
Seniors who are successful entrepreneurs are usually involved in something they are passionate about and love doing. Many have looked to the needs of the aging baby boomers to create businesses involving such things as healthcare, companionship, gyms, or specially designed clothing for arthritic fingers. Others have created an opportunity for themselves to fulfill a dream. A recent story in a local paper demonstrates that wonderfully. A man worked for one of the Big 3 automakers in a subsidiary company. He always wished he could own one of their luxury cars. The subsidiary was sold to another company and he was pushed into an early retirement. He went to work at a luxury hotel where he became a valued employee because of his ability to treat guests well and anticipate their needs. When the opportunity arose, he became a chauffeur for the hotel. At least he was driving a luxury car. He saved his pennies and was able to buy his own luxury car and set up his own business as a private car for hire. His special touches like bottles of chilled water, a copy of the Wall Street Journal and other items have made him a favorite with local businessmen, wedding planners, and even celebrities. He charges $60 an hour and is in great demand. He had his dream and pursued it even though it took an unusual path to get there.
Understanding what people want and/or need and how to get along with a variety of people in all sorts of circumstances is life experience that these new entrepreneurs can bring to a business. You can't teach or buy that experience. They have also gained a great understanding of what really is a crisis and what isn't. They are hard to panic and realize that what seems a disaster today will not even be worth a footnote in a year.
One area in which many have found great success is consulting and often for the same company they left voluntarily or which eased them out. Many companies who have opted for the younger work force have come to discover that their former employees have specialized expertise in an area, are great problem solvers, can salvage what might be a disaster, and can focus completely to bring a project in on time. Suddenly, the outdated former employee is exactly who they need. As consultants, they can demand more per hour and accept or refuse different contracts. In other words, they laugh all the way to the bank.
Today, not everyone of any age has the option to completely follow their passion because they need to be an entrepreneur in order to survive or try to rebuild a viable retirement. All it means is doing what it takes to start and grow a successful company, tiny or large that will allow you in the future to pursue your dream: just like the man who wanted to own a luxury car.
Seniors have invaluable skills, experience, and focus to bring to any enterprise and make it a success. If you decide to become an entrepreneur more power to you and don't let anyone tell you that you are too old. You bring resources to entrepreneurship that younger people don't have. So if you want to be an entrepreneur, go for it. Make the statistics even better for our age group. If we can try it so can you.