Too Old To Start A Business?

A recent article in the Wall Street Journal caught our eye, it read “Americans in their 50s and 60s make up a growing share of entrepreneurs”. According to one study mentioned in the article, 24% of new businesses started in 2015 were founded by professionals older than 55 years, whereas that percentage was only 15% ten years prior. In contrast, only 25% of the businesses started in 2015 were set up by entrepreneurs less than 34 years of age, compared to the last decade.

“These are indeed trends that are fully reflected in our M&A advisory activities,” says Achim Neumann, President, A Neumann & Associates, a New Jersey based M&A advisor and business brokerage firm. “We have increasingly seen ‘older’ professionals contact us about buying a business.” What drives this trend?

First and foremost, seasoned entrepreneurs have more experience – and patience – in starting a new business. This is an important quality in the start-up phase of a business, as this period confronts the new owner with new and unchartered territory. The demand to formulate new policies and to hire the right team for the business are things that, normally, someone with a few more years under their belt are more equipped to work through. Experience gained in previous business ventures goes a long way in resolving these challenges, whereas patience and realistic expectations only further contribute to success.

Secondly, even though such seasoned entrepreneurs often dip into their nest egg, they typically have more financial resources available than younger entrepreneurs – funds needed to weather the undeniable initial financial challenges a new business – or a newly acquired business – brings.

“Our firm often helps new entrepreneurs to access their 401k savings and also points them to the right lending sources,” says Neumann, “in order to ensure sufficient capital available to succeed in the new venture.”

Thirdly, the demographic trend towards an aging population – often confronted with the ‘empty nest’ syndrome at home – has produced many talented and experienced entrepreneurs.  The sheer number of individuals in this growing demographic will shift entrepreneurship to more seasoned individuals.

Interestingly, the aforementioned article makes a few references to the actual motivation of such experienced entrepreneurs to start a new business, and the consensus is that monetary rewards are not the primary driving factor.

Rather, it’s the drive for independence – the quintessential force driving most entrepreneurs – no matter the age.