Entrepreneur: 6 Tips for Starting a Small Business After Age 50
Starting a business is difficult at any age. Baby boomer entrepreneurs planning to retire soon need to be particularly careful that they don't gamble and lose their life savings.
"You have more capital to invest, and at the same time, you have more to lose," cautions Dan Olszewski, director of the Weinert Center for Entrepreneurship at the business school at the University of Wisconsin-Madison. But baby boomer's accumulated knowledge and experience also put them in a better position than most to succeed.
"Many of the most successful businesses are when the entrepreneur knows something about the industry and they are able to leverage that knowledge in some way and come up with a better solution," Olszewski says.
Here are 6 Tips for Starting a Business After Age 50:
Tap your network
A lifetime's worth of accumulated friends and acquaintances are essential to get a business off the ground.
"We have this archetype of the lone genius, but that's not really how it works. It's more often a team effort," says Dane Stangler, a senior analyst at the Kauffman Foundation, a group that promotes entrepreneurship. "No one could build a company today in the absence of a network, and you can see how someone in their 50s is going to have a much deeper network to tap into to build their company."
Many cities have business incubators, which provide start-up companies with affordable office and lab space and valuable mentorship and networking services. Local colleges also are a valuable resource for ideas and troubleshooting.
Use your experience
Many baby boomers have accumulated expertise in an industry that gives their business a head start.
"You know a lot more and have an understanding of what your customers need because you may have been in that industry," says Olszewski.
"You probably have a much larger Rolodex of connections that help you pull together different resources, such as funding and finding customers."
Lyn Berg of Fayetteville , N.C., served in the military for 28 years and now runs a business designing quickly erectable 150-foot mobile communications towers, Mobile Tower Technologies.
"My experience in the military and my experience in undesirable situations was a great help" Berg, 71 says.
Find start-up funds
One of the greatest barriers to starting a business is coming up with the start-up capital.
Dan McDonald, 57, a retired electrical engineer from Knoxville , Tenn., and his business partner, Ron Michaels, won a grant from the U.S. Department of Energy to develop their plant X-ray system and start their company, Phenotype Screening Corp. , in 2004. But even that did not solve their money worries.
"We were very fortunate to have won a grant from the Department of Energy for $50,000, but my partner and I couldn't take a salary on that kind of money," says McDonald. "We mortgaged our homes, and you are always hustling and watching over your business."
Some cities offer tax breaks to entrepreneurs and small-business investors.
For example, North Dakota's Seed Capital Investment Credit gives investors in start-up companies a significant tax break, and new entrepreneurs in the state also get special tax deductions. And in Maryland, the state-funded Maryland Venture Fund provides financing for start-up technology and life science companies. To find out about tax perks in your state, contact your state's department of revenue.
Plan for longer hours
Just because you don't have a boss, don't assume you'll get to take long lunches and go home early.
"Usually when you start your own business, you are on a shoestring and you don't have a lot of other people around to do the work for you," says John Challenger, CEO of Chicago-based outplacement firm Challenger, Gray & Christmas.
"One issue for people in their 50s is: Do you want work to dominate your life?"
Linda Remeschatis, 60, a former prosecutor in Madison , Wis., who started an online food and gift store, Wisconsinmade.com, now makes less money and works more hours than she did as an attorney, but she says enjoys her second career more.
Keep start-up costs low
Many small-business owners launch their companies on their own property.
"For the vast majority of our start-ups, they work at home," says Jeff Williams founder of Bizstarters.com, a company that coaches entrepreneurs over 50. "Baby boomer entrepreneurs want to be able to sit on the patio while they're taking a phone call and have very low overhead in their business."
Remeschatis and three of her employees work out of her house in Madison, and Berg tests his communications towers on his own 20-acre property in Fayetteville.
Have a backup plan
Most small businesses don't succeed. Only about 44 percent of new businesses survive four years, according to the U.S. Small Business Administration.
"You have to be very conformable with the worst-case scenario for the outcome of that business," says Olszewski. It's risky to pour your life savings into a new venture. It's essential to have a fallback plan, according to, Beatty Brasch, 69 of Lincoln , Neb., who founded the Center for People in Need, a nonprofit that provides goods and services to the working poor.
Brasch says: "I always have a plan on how to get out of it if it doesn't work."
Entrepreneurs never really retire. Contrary to the stereotype of 20-somethings starting Web-based businesses in their basements, it's actually the baby boomers who best embody the entrepreneurial spirit.
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Some people start businesses later in life because they want to; others do it out of necessity after a job loss. Steve Vernon is among the fortunate ones who made the leap to entrepreneurship on his own.
It's the Right Time to be an Entrepreneur
Vincent A. D'Elia, Regional Director Bergen SBDC
A PRESIDENTIAL REPORT TO THE U.S. Congress stated that small businesses have always been the backbone of the economy and account for the most innovation and job creation. It further states that small businesses have sustained the economy in weaker times and have contributed to the continuance of long-term growth. Today 90 percent of these small businesses employ more than 52 percent of the American workforce.
The Failure Myth Revisited
Vincent A. D'Elia, Regional Director Bergen SBDC
The myth of failure that, "9 out of 10 businesses close in their first year" is far from the truth. The US Census Bureau's, Business Information Tracking Series, is used to track 5.5 million employer firms every year. It showed that 66 percent of new businesses survive two or more years, 50 percent survive four years and 40 percent survive six years or more.
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