There was a time when workers would put in their 30 years of work, retire with a pension, and look forward to spending their retirement days relaxing and just doing the things they wanted.
However, new reports indicate that the hot new ‘Retirement Plan’ for Baby Boomers is to start a business.
According to separate studies by the Kaufmann Foundation, Gallup, and AARP, have found that Boomers (born between 1946 and 1964) were among the fastest-growing groups of new entrepreneurs in the U.S. Their success—typically powered by large professional networks and savings accrued from years of work—has made them an economic force to be reckoned.
A report published last year by the Kauffman Foundation found overall entrepreneurship rates have changed drastically over the last decade. In 1996, a little more than one-third of all new businesses in America were started by entrepreneurs aged 20 to 34 compared to just 14 percent for entrepreneurs 55 and older. In 2015, 20-to-34-year-olds started just 25 percent of new businesses, while the percentage of Boomers, dubbed “seniorpreneurs,” ballooned to 24 percent.
Click here to read about the business edge Boomers, have over Millennials, along with the challenges both generations face in the world of business and startups.
However, not all Boomers who decide to start a business do so out of a sense of opportunity. For some, entrepreneurship is a necessity while others simply don’t want that laid-back lifestyle. A 2013 survey conducted by AARP put a spotlight on the fact that finding a new job can be difficult for older workers, particularly in a post-recession economy.
“About one quarter (26 percent) of older workers report that they have experienced at least one … discriminatory practice, a figure that rises to nearly six in 10 (56 percent) among those currently looking for a job. Nearly half, 47 percent, of those looking for a job report that they were not hired due to their age.”
Regardless of their reason for starting a business, most Boomers are content to going solo without the expense and hassle of hiring a lot of workers.
Many Boomers have a relatively decent amount of wealth and/or equity along with a financial sense that comes from experience. And while Millennials aspire to be the next Bill Gates, Boomers are more likely to choose entrepreneurship for lifestyle reasons and tend to go into work that they already know well. Maybe they’re passionate about a longtime hobby or want to use their industry work experience to supplement their income, or just simply work less than they did previously.
While Boomers may not have the same energy as the 20-something Millennials, the knowledge base that comes with age is a big advantage in determining the success of a new business.
And while most “seniorpreneurs” prefer to open a solo business, if they do need additional expertise, it is estimated that the average 57-year-old business person has over 2,000 people in their LinkedIn network from which they can draw if needed.
However, it is a fact that you need money to make money, and getting a business going requires cash flow, but that is a major obstacle that may be easy to overcome for Boomers. Statistics show that Boomers are the wealthiest living generation, many of them have a relatively decent amount of cash and/or equity along with better financial sense compared to the typical Millennial.
While it is rational to take risks when you are younger, because you are less likely to have people dependent on you if you fail, and you have more time to recover, it also stands to reason that Boomers have a much shorter window in which to financially bounce back from a failed business venture.
The one thing that all experts agree upon is that Boomers should not bet their entire retirement on a new venture. Of course, starting a consulting or service type business, based on the Boomer’s industry knowledge, it is much less expensive to start and operate than a business that sells goods. The magazine Small Business Trends put together some Startup Statistics—The numbers you need to know.
Before starting any business, Boomers should ask themselves some serious questions.
- Can I really afford to draw down my savings or take a second mortgage on a venture that could possibly fail?
- What is my exit strategy?
- Is this something that I can do from my home or office or will I need to establish an office or retail presence?
- How much equipment or inventory will I need to start this venture?
- How long will it take me to build up enough clientele to start breaking even?
- How many hours a week will I realistically need to work in order to make this venture a success?
- Do I have the time to run the business and market for prospective clients, or will I need a sales/marketing person?
- Who will be my target customer base and what will I need to do to contact them?
With regards to the last two bullet points, finding customers is a challenge, even for established companies. Gone are the days when you placed an ad in the Yellow Pages or bought a package run on the radio or in the newspaper. Today’s marketing needs to be targeted and consistent in order to make customers spend with you, rather than your competitor.
The one advantage that Boomers have is the fact that they may have former customers or friends that will jump at the chance of using their service or buying their goods. But when it comes to finding younger customers, Boomers will need to understand Social Media. Facebook along with Twitter and Snapchat are wildly popular among the younger generations.
And even though Boomers have a solid track record of working for thirty years or more, they still need to develop a solid Business Plan and financial projections that will guide them toward success.
If you are thinking about starting a new business and need assistance, the experts at Business Finance Corporation can help you develop a plan for success. Call 702-947-3800.
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