There are lots of reasons you might be reading this article, and wondering if starting a business after 50 is a bad idea. You also probably have this feeling that people just don’t become entrepreneurs at your age. Well, that’s just plain wrong. The experts, and common sense say you are more likely to start a good company at this age.
Reasons to Start a Business After 50
Lost your job – If you lost your job, it is possible that finding a new position is more difficult at this age. Not that there aren’t plenty of companies looking to hire people over 50. But there’s certainly more competition now that you have less time in the workforce and likely a higher price tag. Plain and simple, companies may be looking to lower costs by hiring younger workers. That’s just a reality of our world.
More Flexibility – Sometimes at this age you just want to have more of a say about your time. Now, starting a business can (and probably will) take more time, especially in the beginning. But once you get things up a running, often you can have more flexibility on when you put in the hours. This is especially true for many online businesses.
Have the Finances – If you are at a point in your life when the finances are looking good, maybe it’s time to take a risk. Many people have been saving diligently by the time they are in their 50’s, and just haven’t take the risk. This is a time if you are in a good spot financially to take a chance with your own business.
The Truth About Starting a Business After 50
Whatever the reason, you should know that some of the most successful entrepreneurs start their business later in life. In fact, a study conducted by researchers at MIT and the National Bureau of Economic Research completely debunks this myth. They found by looking at Census Bureau statistics that “successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0.” Approximately 26% of startups are founded by people who are over the age of 50. Amazing considering that the popularized image of a successful entrepreneur these days is a twenty-something Harvard drop out who can run circles around all of us in coding class.
One reason it may seem that founders are disproportionately young is because the tech industry is so high profile. And the tech industry does in fact have a younger average age (40 years old) of founder. So we probably just see a lot more of them in our daily media.
On the other hand more established industries like oil and gas averaged 47 years old for founders age. There’s a number of reasons to which you might attribute these differences, such as younger people being more knowledgeable with the latest technology. It’s also likely driven in part by lower capital needs for some tech companies versus a traditional business with more overhead involved.
No matter the reason, the statistics are actually stacked in your favor as you get to your 40’s and 50’s.
Older Founders Have Higher Percentage of Success
Not only is it a fact that the average age of a founder is higher than you might expect, but older equals more success too. Again, you wouldn’t know by watching the headlines every day, but it makes a lot of sense when you think about what it takes to be successful.
First of all, experience means a lot, and twenty-somethings just don’t have a lot of that to go around. In the MIT study, they looked at the correlation between how close a founder’s work experience is to their startup industry. They further looked at the amount of time spent working in those industries before starting their own venture. The closer their work experience to that of the startup, and longer time in the industry, both lead to higher probabilities of success.
But let’s give the younger crowd some credit, and understand why often times their ventures end up getting more attention. Likely that’s because their ideas are not tied down by any preconceived notions. Often they come up with truly transformative ideas, that someone with twenty years of experience might resist. That’s a good lesson to an older founder, that sometimes you need to take a step back, and view the world with no restrictions. Make a special effort to look beyond what you think you know in order to make a truly innovative business model.
Investors Are Tricky
Given what we know about the average age of founders, and the relative success rate, you’d think investors trended to the older group of founders. That however, is not the case, and the evidence is not clear as to why they trend to the younger group of founders.
One reason could be as simple as younger founders need more financial assistance. Another possibility is that younger founders may be willing to sell their stock in the company at a lower valuation. But regardless of the reasoning, it’s an interesting fact that VC’s tend to invest in a group of people that is less likely to be successful.
While this isn’t the best news, it certainly is worth pointing out to a potential investor that MIT thinks you are the better bet.
You Are More Connected
Don’t forget one of the key advantages you have as an older founder. You’re more connected. If you’ve been in the sales side of a business, you likely are already well versed in using these connections. But maybe not if you have been in more of a run-the-business role most of your career. Be sure to keep in mind how important those contacts are. From finding the right service providers, to new customers, connections are an invaluable resource.
Resources for Starting a Business After 50
There’s a pretty healthy culture of entrepreneurship in the United States as of late. Because of that, and with the proliferation of the internet, there are plenty of resources at your fingertips. There are even companies focused solely on helping people over the age of 50 accomplish these goals. As more and more people decide to continue working well past retirement age, and business are being started well after the age of 50, there is a growing set of tools to help.
NextAvenue – This is a good organization whose mission is to “meet the needs and unleash the potential of older Americans through the power of media.” They have a lot of publications about starting a business as you get older, along with a lot of other great information.
Bizstarters.com – This company provides coaching targeted at the baby boomer generation. They also provide a host of other products to help facilitate a new business.
AARP – The AARP is a great resource. Not only do they have some good content about small business, but they have a ton of knowledge on other interest of this age group.
What Types of Businesses Do People Start After 50
Consulting/Professional Services – Undoubtedly the most popular business to start is one that leverages experience in a particular industry. Whether that be accounting or logistics, there a lots of companies out there looking for consulting and professional services. One of the unfortunate realities of many companies is they may not want full time employees for some job rolls. Take advantage of this fact. You might actually find yourself making more money as a consultant than you could in-house.
Ecommerce – The number of ecommerce companies has been growing by leaps and bounds ever since the early 2000’s. The good news is that starting an online ecommerce business is easier than ever now with companies like Shopify. The bad news is there is a lot of competition. That doesn’t mean you can’t be successful, but make sure you have a good product, sourcing and marketing plan.
Franchise – Owning a franchise is a very popular business for people over the age of 50. It also makes a lot of sense to take advantage of what the franchiser already knows within a particular industry. Why start from scratch, when you can make good money using someone else’s business model. Remember to be very particular about which franchise you decide to go with. Franchises can cost a lot of money to buy-in, and you don’t want to be stuck in a business you’re not passionate about.
The Bottom Line
Whatever the reason you have for considering a business later in your career, know it can be done. Your chances for success have likely even gone up over time. That said, anyone starting their own business needs to be willing to put in the time. The startup phase of a business can be grueling. That’s why you also want to make sure you choose something you’re passionate about doing. If you wake up every day and love what you’re doing, there is a much higher likelihood of success.