The New Face of Startups Is A Senior Citizen

The New Face of Startups Is A Senior CitizenThe face of the typical startup entrepreneur these days is a bit wrinkly, sporting some gray hair, and having the wisdom that comes with age. But is it a good financial move to start a business late in life?

According to recent research, these days those 55 and over are more likely than young people to be starting businesses, says Professor Scott Shane, writing in BusinessWeek.

He cites research by Dane Stangler of the Ewing Marion Kauffman Foundation that showed in every year from 1996 to 2007, Americans aged 55 to 64 had a higher rate of entrepreneurial activity than those aged 20 to 34.

Corroborating this data, the 2008 U.S. Global Entrepreneurship Monitor report released recently showed that from 2007 to 2008, the rate of entrepreneurial activity (that is, people actively starting businesses and people owning established businesses) among senior Americans increased while the rate among younger Americans declined.

Shane also assessed November 2009 Bureau of Labor Statistics data on unincorporated self-employment, and found that it increased substantially with age. He also assessed data on incorporated self-employment. Shane found, “The incorporated self-employment rate is four times higher among those aged 65 to 69 than among those aged 25 to 34-and a whopping 25 times higher than among those aged 20 to 24.”

What’s the reason for the increase in older entrepreneurs? Scott posits some theories: Perhaps the older generation is more entrepreneurial, or perhaps they have more job skills and thus the confidence to go into business for themselves.

I agree that those reasons fit some cases. But here are two other possibilities:

(1) Many people at age 55 and up tend to be at a stage in their lives where they can afford to pursue long-held dreams of owning a business. Chances are, they are empty nesters. They don’t have the expenses they had while raising children. Their homes may be paid for. They may have accumulated savings that they are now free to use. In fact, they may have enough financial cushion that even if the business doesn’t work out, it won’t make much difference in lifestyle – they can afford to lose it. In later life they just may be in a better financial situation to take the risk of starting a business and pursuing that startup dream.

(2) On the other hand, it may be that those age 55 and over are starting their businesses due to being laid off — and unable to get another job. Self-financing a business is more prevalent among older entrepreneurs. So — what if older entrepreneurs are tapping not only into severance pay, but also into retirement accounts? Are they giving up their retirement future to start a business? This is a risk that could pay off – and pay off big — if the business is successful. But if not successful, it could mean a difficult and less secure retirement for you and your spouse. Because at that age, you have far less time to start all over again if your startup doesn’t pan out.

The decision to tap into retirement funds for your startup looks very different when you have 20 or 30 working years left ahead of you, versus 5 or 10.

I’d love to hear from some entrepreneurs who started a business at age 55+. Has it been a good financial move for you? Did you use retirement funds?

Editor’s Note: this article was previously published at under the title: “Startups Are Graying But Is it a Good Financial Move?” It is reprinted here with permission.


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

15 Reactions
  1. Anita- I started another business at age 61, and I find it tremendously rewarding, and intellectually stimulating. Better than watching Oprah!

    I would advise anyone of my age to do it. Remain active and live life.

  2. Anita,
    You have made some great points here, as usual.

    You are correct about the 55+ folks that are starting their businesses, now. Lots of them are downsized execs and middle managers who’ve chosen to move away from corporate America, and move towards something else;

    Freedom and control.

    The risks are certainly there. The risk of losing a job after a year or two is a real one, too.

    Some of my franchise candidates tell me that they just don’t have the energy (or the desire) to pursue new job opportunities in this market. Way too much competition. Way too much time involved in doing so.

    The Franchise King

  3. Anita,

    You have shared some excellent reasons why folks over 55 are starting businesses. I believe that there is another very important reason for this trend. Many of the boomers have had successful careers and have even enjoyed many of the socially accepted rewards of being successful. However, they are also reflecting on their journey and what is missing. That burning desire that may have been ignored since they were very young.

  4. Anita,
    I think your 2 possibilities are MUCH more likely than the one Scott suggests. My mom was 50 and empty nesting badly – there were 6 little Indians no longer in the tipi. She went back to school and became a teacher, and had a wonderful career (starting at age 55) that she loved and it created a nice retirement package for her. Not exactly starting her own business, but the same mentality I think driving it. And it was precisely for the 2 reasons you mention – enough financial cushion to warrant it and empty nesting. My dad has been an amazing architect for 40 years, and retired last year. He is now starting to promote his fine art, making a little business out of it. In his case, it is pursuing the lifelong dream that having a huge family never allowed – much like David points out above. His retirement savings allow him to do so as well, as you suggest.
    Thanks for the read and insight – my parents will get a kick out of it!

  5. They have resources and they have an area of expertise, so why not start a business?

  6. Anita,
    Great article, you are talking about the people I work with every day. The days of having job security are gone and statistics show that companies are more inclined to hire temporary people instead of full time. They are beginning to look at their job career as a training ground for being a business owner and when they align with the right franchise that really matches all of the characteristics they are looking for in a business becomes a real win-win. Most of the problems come when people get sold and buy a business based on emotions and not facts. Women over 55 have become empty nesters and ready to take on a new challenge and bring lots of great skills and experience to a business. Taking the route of a franchise gives them autonomy but also the added support, systems and community that adds to their success
    To address your concern regarding using retirement money, you raise a good concern and it has to be done properly with the right company. This is another area that people have to be cautious about – do your research. One of the biggest challenges that a new business has is cash flow. If you use your retirement money you are self- funding (done properly) your business, don’t have a payment to make and will have more cash to use in the beginning. This will enable you to get to break even faster. I know that clients of mine who used this source were sure happy about it when the market crashed.
    Your Franchise Coach Phyllis

  7. Anita: I was laid off from a nonprofit Nov08. I applied for 185 jobs from senior staff accountant to CFO from then until late 2009. I have over 30 years experience in financial management, mainly in manufacturing. Since I could not get an accounting job, I decided to start my own accounting and consulting business. I offer myself as an interim CFO/Controller, do turnaround planning, business startups, business strategy,compilations, business/individual tax preparation, and I am becoming a certified QB ProAdvisor. Business has been slow. I’m now working on getting a good website up and running so I can develop an online business. I can do that in 45 states now as an Ohio CPA. I have been living out of my retirement account, so I’m working hard to get new business in the door. Doug Shearer, CPA

  8. Anita,
    Quick question, I am a teacher that is close to retirment. I just started a new business and need investors. Do you know of anyone that is retired that is looking to invest in a fabulous business?
    I’m from the old generation of learning from my elders.
    I’ve tried SCORE but they’re mainly for mentoring..I need both investors and guidance. My product will make someone a lot of money.I’m willing to share my fortune.
    I didn’t give my website because my patent is currently Pending and I don’t want someone else to take my idea.
    I’ve educating many over the it’s my turn.
    Please guide. Thank you Kathy

    • I am retired, looking for setting small business, my wife is related to teaching primary school children.