Podcasts

Starting a Business When You’re Over 50

27% of new businesses are started by those after 50.  Bizstarters chief coach Jeff Williams gives an overview of the entrepreneurial landscape for people over 50, as well as considerations for those who want to start their own enterprise.

 

TRANSCRIPT:


Greg: Hi, I’m Greg Corombos. Our guest this week is Jeff Williams, chief coach at Bizstarters, which specializes in helping baby boomers start their own businesses. You can find them at bizstarters.com. In the past 20 years, the percentage of new businesses started by folks 50 years old and older has grown considerably. And Jeff joins us now to discuss why that is, and what special advantages and challenges come with starting a new business at this stage of life. Jeff, thanks so much for being with us.

Jeff: Thank you, Greg.

Greg: Forbes magazine estimates that in 1997, 16 percent of businesses were started by folks 50 years old or older. Now that’s up to about 27 percent. So over a quarter of new businesses are started by folks 50 years old and older. What’s most responsible for that rise?

Jeff: There’s a very deep-seated, sociological trend, and that is these older boomers—and I’m one of them—we do not see the period of time after we leave the corporate world like our parents did. We’re not prepared to completely stop working. We want to continue to work. We want to continue to contribute. But we want to work differently, and this is where the entrepreneurial aspect comes in.

Number one, we really want to do work we love to do. Many of us, quite honestly, did not have work we loved to do in the corporate world. Number two, we want a much better balance between our leisure time and our work time. This was very difficult to obtain in the corporate world. Matter of fact, I can recall in my later years in my corporate career—I was a marketing executive—I had to give up pretty much all of my outside interests and charity work because I was working such long hours. Now that I’m self-employed, I have the ability to merge these two things better. Number three, quite honestly, we need the money.

Greg: So it’s more really of a mindset and basic facts of life in terms of the income as opposed to the rise of the internet in the late ‘90s, or just the fact that folks in their 50s are generally healthier and have an outlook that they’re going to live another 30 or 40 years, because in most cases, they probably will.

Jeff: Well they at least think they’re going to live through their 70s, which means if they’re 59 or 60, they can certainly work through their 60s and maybe their early 70s. Because there is a really new style of running a small business today that allows you to work full-time, part-time, or sometimes, as I like to say. So because you can flex in the amount of time in the business, you really continue to do this for quite a long time. As you get a little bit older—I’m 69 years old—I’m going to be hitting that 70-year mark pretty soon. Well, I want to cut back a little bit. I don’t want to be working 50 hours a week. But I would certainly want to work 25 or 30 hours a week. And you can do that today because of the new style of small businesses available.

Greg: We’re talking with Jeff Williams. He’s the chief coach at Bizstarters. Jeff, from the data you’ve seen and from what you’ve been able to be part of in terms of coaching these folks when folks 50 and older start new businesses, do they have the same success and failure rate as those started by younger folks? Or does their previous experiences make their businesses more likely to succeed?

Jeff: They are more successful, and surprisingly even in tech start-ups. Matter of fact, last year the average age of a start-up entrepreneur for a tech company in the United States was 45 years old. This really surprises people, because they hear of all these 20-somethings starting YouTube and such. But the reality is, statistically, we start older, in many cases.

We’re more successful, I think, for three reasons. Number one, we’re very well networked at this point in our lives. We know a lot of people, which means that we can get help doing certain work, or we need advice, or we need an expert opinion, we can find someone quickly. Number two is, we’ve been through a lot of ups and downs in our lives. By the time you get into your mid-50s, you’ve had the good times and the bad times. You don’t panic so easily if something comes up that’s unexpected. Number three, we have some money. The average start-up client we deal with is 57 years old, and they probably have at least 300,000 in their 401(k). Now it’s not what it was before the recession, but it’s still a fair amount of money.

Greg: It sounds like these folks who are mainly making this jump after they retire, rather than leaving their previous employment at a time when usually you’re about to maximize your income in the final 5, 10 years of your employment. That seems to be what you’re saying here, that this is something to do after they’ve maxed out that income from their previous employment.

Jeff: Well we really have people from both settings—people still working, and people that have retired. Because the reality is that over the last 10, 15 years, the average corporate manager has not been getting a very large increase in income. Unless you get a major promotion, the average increase has been three to four percent. That is one of our big economic problems in this country is that wages have not been going up, even of senior-level managers. So, you get to be 55 years old today, or even 50 years old—you’re living on borrowed time in the corporate world. They can come in and drop the hammer on you at any time. They can either come in and say we’re going to have an early retirement deal. Matter of fact, Ford Motor Company announced last week they’re laying off 1,400 managerial people, primarily in Michigan, and they’re going to do it through early retirement. So these are guys that are 55 to 60 years old who thought, I’m going to hang in here till 62. No, they’re not. So, we get both types. We get people who are still working full time, and we counsel them. We have nighttime coaching sessions or Saturday morning coaching sessions. And then we have the people who have either been pushed out or who walked away, and they have more time available. And those people we counsel during the daytime.

Greg: We’ve talked about the advantages—the experience, the networking, and having some money can mean towards the successful launch of a small business at that age. What about disadvantages? What are you seeing, if any, on that front?

Jeff: Well I will tell you that the perspective boomer entrepreneur is pretty concerned about what their total financial investment is going to be. But once again, we really see two groups of people here. There’s the person who has had the idea, or business skill, or hobby that they’ve thought about for a long time—they want to turn it into a business. And those are the people who come to us. It’s what I call scratch start-up in that they’re creating their own business model. And those people, they’re really concerned that they don’t get too far into this thing. So most of our clients are launching and running their companies for well under 25,000 dollars the first year because of the nature of the business. Now the second category of older boomer are people who are little more willing to put money into it. Those are the people buying franchises, because there, you’re typically putting 100,000 to 150,000 dollars a year in. So, they are concerned about the money. Number two, they’re concerned about, what will this physically demand of me, the whole stamina issue. Even though we’re in good health, we don’t have quite the same energy level we used to. And, we’re thinking, oh boy, what am I going to do. And number three is, I don’t want to do this all by myself. So in that situation, they’re either looking for a partner, or they’re looking for an ongoing relationship with a business coach, which is what we provide them with.

Greg: So, obviously from what we’ve discussed here, it makes a lot of sense for some people, maybe not as much for others. What kind of checklist of questions should folks ask themselves if they’re considering, that this is the right thing to do.

Jeff: Number one would be to write down in one short paragraph what it is you want to do. Is it the hobby you’re turning into a business? Is it a skill, is it a service? Write down what you intend to do. The second paragraph should be, you should be able to define the problem that you will solve or a need that you will meet because that’s the whole core of successful marketing. If there isn’t a connection in the marketplace, I don’t care how well organized your company is, you’re not going to succeed very well. Number three would be a short paragraph about how your solution for the problem is going to be better. And then the fourth thing I would do is to sit down and say, ok, based on what I know from my past experience, what kind of money do you make doing this? For example, if you’re a consultant, can you expect that a typical job will be—$5000, $7000? If you’re selling a craft item, how much could it sell for? You need to put some numbers to this concept. If you use that four-step process, and you’re looking at this and saying I am confident after I’ve written this stuff down, I would say you have a high percentage of this succeeding.

Greg: Jeff, last question before we run out of time. In terms of the impact of boomer-started and boomer-owned businesses on the economy—over a quarter of new businesses being started by folks in this demographic—what kind of impact are we seeing in the overall economy as a result of them bringing their experience in an entrepreneurial setting?

Jeff: Pretty incredible. Last year, the 25 percent start-ups equated to 125,000 new business started. And if they’re like our clients, they’re spending between 25,000 to 50,000 dollars that first year. So multiply that out by 125,000. And you’re getting millions and millions being put into the economy.

Greg: And new jobs, I would imagine, to make these new businesses get off the ground, as well.

Jeff: Yes, absolutely.

Greg: Well, Jeff, it’s a fascinating look at a growing trend, and one that is very very impressive, given the results you’ve articulated, and we’ve seen over the past couple of decades. Thanks very much for your time with us today. We appreciate your expertise.

Jeff: Thank you, Greg. Enjoyed it.

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