When you hear the word “entrepreneur,” what image springs to mind? Mark Zuckerberg in his hoodie? The young Steve Jobs in his parents’ garage? The familiar faces of entrepreneurship are those of brilliant young men who are tech-savvy newsmakers.
In reality, however, today’s entrepreneurs are a much more diverse group, including those who traditionally might have been considered “ready for retirement.” Baby boomers, born 1946-1964, are redefining the marketplace as they rely on decades of experience, talent and passion to launch and grow businesses.
What’s behind the boom in boomer entrepreneurs? Consider that some of them may:
- Finally be giving life to long-held dreams by turning in corporate badges to hang out their own shingles.
- Be energized by working and staying active. Many boomers say they simply are not ready to put an end to their work lives.
- Need or want work/life balance that the corporate world doesn’t offer. Caring for a loved one, or simply volunteering or enjoying leisure time, can become possible for people who lead their own businesses.
Need to replace or supplement income. Corporate downsizing closed some doors for older workers. Plus, many pensions and retirement accounts took a beating in recent years.
Long live the boomer economy
The growing percentage of Americans working past age 65, the rise in life expectancy and the fact that about 18 percent of workers older than 65 are self-employed suggest that Boomers’ impact on the economy will be felt for years to come.
During the Ewing Marion Kauffman Foundation‘s sixth annual State of Entrepreneurship Address at the National Press Club, Kauffman Foundation CEO Wendy Guillies outlined the economic impact of both millennials and boomers. Citing research from a Kauffman report, “The Future of Entrepreneurship: Millennials and Boomers Chart the Course for 2020,” Guillies stated that the United States doesn’t just need economic growth. It needs economic renewal, renewed mobility and a renewed notion of shared prosperity and sense of possibility. One of the best and most effective ways to achieve those goals is entrepreneurship — the creation and growth of new companies.
And there are encouraging signs. According to the Kauffman Index of Startup Activity, “Startup activity rose in 2015, reversing a five-year downward trend in the United States, giving rise to hope for a revival of entrepreneurship.”
Notably, the percentage of firms created by Americans ages 55 to 64 grew more than any other age demographic, up 11 percent to 25.8 percent in 2014 versus 14.8 percent in 1996 .
Why boomer entrepreneurs succeed
Many boomers are finding entrepreneurial success. At least in part, that’s because they:
- Have enriching work and life experiences from which to draw. Varied backgrounds, experiences and perspectives form a solid foundation for business success. Boomers whose businesses succeed start by outlining strengths and areas of expertise they bring to the table.
- Are living and working longer and, therefore, have more years to invest in running a business. In “The Future of Entrepreneurship: Millennials and boomers Chart the Course for 2020,” the authors state:
“In 1980, the average 65-year-old American could expect to live another 15 years — years likely filled with health problems. Today, the average 65-year-old can expect to live another 21 years and, because of advances in medical treatment and technology, those additional years are more likely to be healthier — even more economically productive — than in past decades. To remain engaged, many may choose to start or join businesses, bringing their experience and networks to bear.”
- Have built a robust network. Whether through professional connections, personal relationships or other social activities, boomers have had ample time to cast a wide net. Those who are successful entrepreneurs continue to invest themselves in the entrepreneurial community, learning the “who, what and how” of the local business scene.
Why boomer entrepreneurs may fall short
While boomers may have some built-in entrepreneurial strengths, they also may face weaknesses or pitfalls. They may include:
- Using precious retirement funds as business financing. There’s not one right answer to the question of how to finance a business — no “one size fits all” approach. But boomers who fail to investigate and seek out appropriate business financing options and, instead, sink their retirement savings into a startup are taking an unadvisable risk from which they may not have the time to recover.
- Failure to plan the business lifecycle and exit plan. Unlike the 20-something crowd, boomers don’t want or have 30 years to build businesses. Their business “on ramps” and “off ramps” are much closer together. That’s why having a business lifecycle plan and a solid exit strategy are critical, especially for boomers who hope to use proceeds from the sale of their businesses to boost to their nest eggs. For other without a plan, one or two missteps can severely cripple retirement funds.
For many boomer entrepreneurs, the potential benefits of starting their own businesses outweigh the potential risks. In fact, no matter your age, there has never been a more exciting time to investigate business ownership. In the immortal words of Mahatma Gandhi, “You may never know what results come of your action, but, if you do nothing, there will be no result.”