Statistics from our 2018 State of Small Business survey point to more baby boomers becoming successful small business owners. Learn more about this segment of entrepreneurs, the top industries and the challenges they face.
Proving that it’s never too late to pursue your passions, data from the 2016 Kauffman Startup Index indicates that while baby boomers currently account for 25 percent of new business owners, the last few years show the number of boomer entrepreneurs are on the rise at a rate that outpaces other age groups.
At Guidant Financial, we’ve worked with many entrepreneurs age 50 and older who are trading in retirement for the adventures of business ownership. So it was no surprise that our 2018 State of Small Business survey, recently launched in partnership with online lending marketplace LendingClub, reflected that this trend of baby boomers in business is here to stay.
Our survey revealed some exciting small business trends about how entrepreneurs 50 and older are finding success on Main Atreet, including everything from the passions that drive them to where they find funding. Take a look at some of the top small business statistics for the baby boomer generation:
- Fifty is a prime time to start a business. Individuals over the age of 50 accounted for 64 percent of current business owners, a 31 percent increase year-over-year. Among aspiring entrepreneurs, 43 percent were 50 or older.
- Boomer entrepreneurs are looking for independence. After years of climbing the corporate ladder, respondents reported their top reason for pursing business ownership was readiness to be their own boss (43 percent), followed closely by wanting to pursue their passions (42 percent).
- An encore career in business ownership is the fast track to job satisfaction. A very encouraging 76 percent of boomer business owners reported their happiness as an 8 or above on a scale of 1 – 10.
- Boomers report high rates of success. Newfound happiness and independence paired with years of professional experience seems to be a recipe for success for boomer entrepreneurs. Seventy-six percent of respondents in this group said their business is currently profitable, and 64 percent are actively working to grow their current operation.
- Debt-free financing is a top choice for baby boomers. Cash was the most popular funding method business owners over the age of 50 reported, but the second most popular was 401(k) business financing. In fact, 28 percent more entrepreneurs 50 or older used retirement funds to launch their business compared to the national average.
- Cash flow is a universal struggle for business owners. Even though older entrepreneurs are typically better qualified for business financing because of extended credit histories and greater retirement and personal savings, when asked about their top challenges as business owners, 68 percent of boomer respondents answered a lack of capital/cash flow.
- Cash for a down payment is a struggle for aspiring boomer entrepreneurs. While 61 percent of hopeful entrepreneurs over the age of 50 reported the biggest hurdle to business ownership was that they couldn’t find funding, another 47 percent said obtaining funding was difficult because of coming up with the cash for a down payment on a small business loan.
The trend for 2018 is clear — we can expect to see more baby boomers delaying retirement to pursue encore careers in entrepreneurship. With longer credit histories, more money in personal savings and increased buying power through alternative funding like 401(k) business financing, the boomer generation should continue to see sustained success on Main Street.
Want more in-depth information about how boomers are growing their small businesses?
Read the full report here.