When we are boomers and become entrepreneurs, how do we do? Over at our partners’ website NextAvenue.org, we saw this piece, which we adapted, by Richard Eisenberg, author of How to Avoid a Mid-life Financial Crisis, and the answer is, we rock!
Boomers have proven to be prolific entrepreneurs because self-employment provides flexibility and a more gradual path toward retirement. But do older entrepreneurs have advantages as small business owners over younger entrepreneurs?
To find out, and to get smart tips for business owners over 50 as well as wannabes, I recently interviewed David Deeds, the former co-founder and president of LightSpeed and now the Schulze Professor of Entrepreneurship at the Schulze School of Entrepreneurship of the University of St. Thomas in Minneapolis.
Highlights from our conversation:
Next Avenue: How would you rate the time we’re living in for starting a business after 50, and why?
Deeds: I think it’s a pretty good time, depending on what you’re trying to do. The cost of development for building a site and reaching audiences has come down dramatically. You can reach a lot of people through social media and get feedback cheaply. Go back 15 years, and it was very expensive to build something and reach an audience. If you’re looking to create the next Facebook or Oracle, who knows? But it’s a pretty good time to pursue a passion you think you can turn into a viable business and do a little good in the process.
Next Avenue: And how are things for older entrepreneurs who need to raise money to start their businesses?
Deeds: The availability of credit is pretty good and interest rates are very low. If you have a good credit score, loans are out there and they’re relatively cheap. A lot of people in their 50s and 60s have established good credit. If you’re looking for angel or venture capital, it’s a good, but not a great, time.
Next Avenue: What advantages do you think someone has as an over-50 entrepreneur compared to entrepreneurs in their 20s and 30s?
Deeds: As someone who just turned 55, I think there are a lot of advantages, and far more advantages than disadvantages. In your 50s, you have experience, knowledge and wisdom. You’ve seen a lot of things while you’ve worked in your career, or in a multitude of careers or jobs. You probably have some financial wherewithal. You’ve established a network over your career that you can get feedback from — maybe potential customers or engineers or designers you can learn a lot from over a cup of coffee. To be honest, the only serious disadvantage I see is societal perception that entrepreneurship is for wide-eyed twenty-somethings. That is wrong. One thing we know about entrepreneurs: They are as diverse as the population. There’s no magic test that says you can or can’t be one.
Next Avenue: Some people think older people aren’t as adept at technology as younger people. Is comfort with tech a disadvantage for entrepreneurs over 50?
Deeds: Yes, my kids are better with apps and phones than I am. But on the flip slide, I can learn pretty much anything I need to know by spending a little time at it. And I can always hire a twenty-something; they’re readily available. Also, the world of ventures is not limited to something that sits on a phone. We’ve gotten locked into this strange idea that entrepreneurship means a business has to fit on a phone and I think that’s craziness.
Next Avenue: The Kauffman Foundation says 26 percent of new entrepreneurs in 2015 were 55 to 64 compared with 15 percent in 1997. Why is that?
Deeds: I think it’s two things. You can’t deny the underlying demographics; more people are getting to that age group. And a lot of it has to do with the recovering economy, housing prices rebounding and people in this age group getting to the stage in life where their kids are out of college. So they can look up and say: ‘I don’t want to go to this job anymore.’ They want to control something that’s theirs. The upside is you may create a lot of wealth for you, but more importantly, you’ll be doing something you love to do and enjoy and that will make the next 20 years of your life meaningful.
Next Avenue: What advice would you offer people in their 50s or 60s who are thinking of starting a business full-time or part-time in retirement?
Deeds: The most important thing: Do your homework. Talk to potential customers and people who have the problem you’re trying to solve with your business. Then start iterating simple prototypes. You’re not going to get it right at first and you don’t want to go all in until you’re close to getting it right. Don’t quit your day job until you’re ready. And don’t bet the farm. The other thing I’d say is to put together solid financial plans. You’re in an age group that wants to have a nice retirement and travel. So plan for yourself and for your venture. As you start a business, your personal and venture finances will merge very rapidly.
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