FOR OLDER WORKERS, starting a business may be a neat idea that you filed away long ago, you know, somewhere between would have been nice and not a chance . But these days, as people lead active lifestyles well into their 80s, starting a business at 50 or even 60 is less of a stretch. And in fact, many small-business consultants agree: Older entrepreneurs have some distinct advantages over their younger cohorts.
When 48-year-old Constance Hill-Johnson launched a Visiting Angels franchise in 2002, a home-based caregiver service in Cleveland, she already had 20 years of experience managing nonclinical operations at a hospital in St. Louis. “I’m not a nurse, and I don’t profess to be,” she says. But her experience, plus a master’s degree in health-care management, made her better equipped to deal with seniors’ issues than someone unfamiliar with the industry. “It was an easier transition for me,” she says.
Mature business owners tend to walk into a venture with a full rolodex and 20 or 30 years of experience working in various capacities, says Deborah Russell, director of work-force issues at AARP, the Washington advocacy group for adults 50 and older. Additionally, she says, “they may have a larger pool of finances to invest in a new business than younger entrepreneurs.”
But also, says Marc Freedman, founder of Civic Ventures, a San Francisco think tank for retirement and workplace issues, “they are finally in a good position financially. The kids are grown up or just finished school and the mortgages are on the downward slope.” Plus, if they’re entering retirement they have more time to focus on new ventures, he says.
Given their typically richer track records and often solid financial footing, older would-be business owners are generally less risky than younger entrepreneurs who tend to have fewer years of work experience, say lenders. “Certainly, it gives credibility to the venture if the person has experience in the field that they are entering,” says Mark Hogan, president of small-business banking at Bank of America in Charlotte, N.C. He adds that the business itself may be more fruitful since older entrepreneurs tend to bring with them a network of contacts, customers and clients.
Plus, says Raymond Joabar, senior vice president of product management for OPEN at American Express in New York, older entrepreneurs “are a little bit smarter about things.” They’ve made mistakes in the past and can attack new problems with those in mind.
But even as mature entrepreneurs tend to have more savings than their younger counterparts, AARP’s Russell cautions against tapping into it. “If the venture doesn’t succeed, it may be more difficult to make up losses,” as getting a job is more challenging with age and replacing retirement savings is tougher, she says.
To be sure, starting a business at any age requires a great deal of time, money and energy — and there’s no guarantee of success. Here are a few ways to mitigate your risks when you’re starting up at an older age:
Don’t give up your day job, yet
In 1999, two years before celebrating what he calls his “graduation” — that is, his retirement after working for 37 years — Howard Stone, at the ripe age of 62, began taking career- and life-coaching courses. After about a year, he decided to strike out on his own. “I loved the idea of coaching and I had already brought in clients,” he says. So when Stone finally left his job in publishing a year later, he already had a basis on which he could build his retirement-planning web site, 2young2retire . Today, nearly 10 years later, he and his business partner and wife Marika Stone have co-authored a book, “Too Young to Retire,” and have developed a thriving international retirement-coach-training practice in Palm Beach Gardens, Fla.
But even as the earlier you plan and begin your venture the better, you still need to be careful about whose toes you step on, says Maria C. Coyne, who focuses on small-business issues as executive vice president of KeyBank in Cleveland. She urges would-be business owners to be upfront with employers about business prospects as soon as possible. “Let them know you’re working on a business plan, particularly if you are starting a related business,” says Coyne. Otherwise, you may be violating a noncompete agreement and could face potential legal disputes, she says.
Go for a ‘test drive’
While in some respects it may be easier to start a business in the same field as your former career, many older entrepreneurs want to instead make a clean break. “A lot of people who’ve worked in a field for 20 or 30 years are bored and want to try something new,” says Freedman, of Civic Ventures. But they may not know the first thing about running a business in an entirely foreign industry. For these people, it’s a good idea to acquire relevant work experience or “test drive” a new industry before starting up any kind of business. “It is important to find a place where you not only subscribe to the mission but also, you can handle the day-to-day aspects of running the organization,” he says.
Work with a partner
It might also help to work with a partner, suggests Freedman. In a partnership, you’re not only sharing costs and the risks, “you’re sharing the stresses and strains, too,” he says. Additionally, a partner can compensate for areas in which you may be weak.
That’s what Martin Lehman, now 84 and a counselor in New York for SCORE , an affiliate of the Small Business Administration, did when he opened up his first women’s apparel store in 1984. Lehman, then 60, tapped a longtime confidant who was versed in the ways of in-store merchandising. While Lehman handled the buying, his partner managed the inventory and the day-to-day look of the six stores they eventually owned together.
Take advantage of networks
Since Lehman had also worked in the garment industry for more than 30 years, he already had a stable of industry contacts. Rather than having to spend time establishing himself in the apparel industry, he says: “Everyone knew Marty.” As a result, he was able to establish working relationships as well as lines of credit with various suppliers right away.
For further advice, Joabar from American Express recommends reaching out to SCORE for business-planning help and networking organizations such as the Women’s Leadership Exchange . Stone from 2young2retire also suggests consulting local area chambers of commerce and Bizstarters , a web site for entrepreneurs over 50.
(“Starting Up,” a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at firstname.lastname@example.org .)
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