When you think of famous entrepreneurs, if you’re like most of us, you think of young twenty-somethings who come up with groundbreaking ideas fresh out of college or even while they are still in school. Because of the famous success stories of the likes of Steve Jobs, Mark Zuckerberg, Larry Page and Sergey Brin, we tend to think “young” when it comes to start-ups.
However, when it comes to the statistics, we are wrong. In fact, the biggest age group for entrepreneurial activity over the last 10 years is the 55 to 64 group, according to the results of a study by the Kauffman Foundation, an entrepreneurship institute based in Kansas City.
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Setting trends in start-up business
Yes, Baby Boomers are at it again, setting trends in start-up business. While overall entrepreneurship has decreased in recent years in the United States, there has been a steady increase among Baby Boomers, that is those Americans born between 1946 and 1964 who now number about one-fourth of the nation’s population.
The Kauffman Foundation found that people in the 55 to 59 age bracket comprised 20 percent of all U.S. entrepreneurs in 2013, compared to 14.3 percent in 1996, a larger rate of increase than any other age group. About 15 percent of these new businesses were started by people age 60 and up.
So what’s fueling the increase? Why are people who should be beginning retirement instead launching time-encompassing new businesses? Well, part of the reason has to do with the economy and part with the pioneering spirit of this particular demographic.
First, let’s look at the financial need aspect of this trend toward entrepreneurship. While the U.S. unemployment rate among Baby Boomers has run lower (4.9 percent according to November 2013 figures) as compared with national average of 7 percent at the same time, many people in this age group have suffered financially in recent years. According to a 2013 study by Pew Charitable Trusts, Boomers lost between 25 to 28 percent of their median net worth during the Great Recession, and, as a result, many in the age group now lack the means to retire.
Another reason is that many Baby Boomers, by their very nature, are not ready to retire. In fact, Boomers are re-defining old age. According to a 2009 Pew Research survey, the average Boomer believes “old age” doesn’t begin until the age of 72, and more than 60 percent of Boomers report that they feel younger than their actual age. A majority of those survey respondents said they feel nine years younger than their age.
Many websites and organizations have been established to meet the needs of this group of graying entrepreneurs. Among them are:
In addition, in February, a U.S. Senate hearing chaired by Sen. Susan M. Collins (R-Maine) of the Senate Special Committee on Aging, called “In Search of a Second Act: The Challenges and Advantages of Senior Entrepreneurship,” examined topics including age bias to seniors by lending organizations and the need for tax incentives for senior start-up businesses.
The hearing participants discussed expanding initiatives like the State Employee Assistance Program to allow older citizens who have been out of work for a long time to use their unemployment benefits to start a new business.
“As the nation continues to struggle with unemployment near 7 percent, it makes sense to consider reforms to the unemployment insurance program that would help people get back to work,” Collins said in a statement about the hearing. “This could be through assistance to help people start their own businesses.”
Older entrepreneurs offer life and work experience to investors. While many older people like to talk about their “senior moments,” their brains may actually work better in some respects than their younger counterparts’ brains. Gary Small, who is the director of the UCLA Center on Aging and the author of The Memory Bible: An Innovative Strategy for Keeping Your Brain Young, explains that the brain is able to make more innovative connections in our 40s and 50s than it does in our 20s and 30s. Small also explains that older people are able to draw upon life’s experiences to help them make better decisions and to use more complex reasoning.
Starting a new business at any age is risky, but many Americans in their 50s and 60s seem particularly suited to taking on this risk. According to a recent survey conducted by the job search engine Monster.com and by the Generation Y research and consulting firm Millennial Branding, 43 percent of the nation’s Baby Boomers identified with the idea of being high-risk. This figure comes in a bit higher than the 40 percent of Generation Xers who identified with risk and much higher than the 28 percent of the younger Generation Yers who felt they were risk-takers.
Other factors for Boomer in pursuing an entrepreneurial path include the freedom it provides. According to The Boomer Report , a part of MBO Partners’ Independent Workforce Index, nearly 60 percent of Boomers said they chose to be independent, noting that they like being challenged (61 percent), being their own boss (60 percent),making an impact on society (56 percent). A full 77 percent said that being able to do what they like is more important than money.
In her book BoomerPreneurs: How Baby Boomers Can Start Their Own Business, Make Money and Enjoy Life, Mary Beth Izard tells readers “Regardless of how you have arrived at this point – displacement, pending or current retirement – now you have the opportunity to decide what you want your life to be from here on out, as you ask yourself ‘What now?’
Here’s more information to show you that Facebook’s youthful founder Mark Zuckerberg is an exception rather than a rule when it comes to being a successful entrepreneur. According to research by Northwestern University’s Kellogg School of Management, 72 percent of the greatest technological and scientific advances came during the inventor’s 30s and 40s, and only seven percent of those advances came before the inventor’s age of 26. Another study funded by the Kauffman Foundation found that of 500 successful high-growth founders, the average person was 40 years old with at least six to 10 years of industry experience, and twice as many successful entrepreneurs were over the age of 50 as were under the age of 25.