Starting over later in life can be intimidating. But starting a business after 50 comes with unique advantages that make it possible to quickly launch a successful business as a baby boomer entrepreneur. Learn more about how to get started and why now is the time to become your own boss.
You’ve probably heard the buzz about millennials and the gig economy — forgoing a 9-to-5 job for a job with more flexibility and more ownership over their career. While this trend certainly exists, more accurately, the group of Americans that’s opting to become their own boss at a rate faster than any other is, in fact, entrepreneurs age 55 to 64. So what’s driving baby boomers to leave the corporate grind and start a business after 50? Most notably, a passion to pursue their dreams and the knowledge and experience only time can provide.
Here’s a closer looks at some of the trends and advantages motivating the boomer generation to become business owners, as well as how to get started successfully as a entrepreneur after turning 50.
Starting over at 50? You’re in Good Company
Many would-be entrepreneurs avoid becoming business owners later in life just because it seems too late to start over. But that is simply not the case. In fact, many of the household company names you’re familiar with — IBM, GoDaddy, Home Depot, and McDonald’s, to name a few — were all started by entrepreneurs 50 and older. Martha Stewart didn’t turn her successful catering company into a magazine and lifestyle brand until after her 50th birthday. Even if you’re not looking to start a multi-million dollar company, you’re still not alone in your pursuit of becoming your own boss. With more entrepreneurs over 50, setting up shop each year, this is a trend that’s sure to stick.
According to Guidant’s 2018 State of Small Business survey, boomer business owners are looking for career independence and finding happiness. More than 40 percent of all respondents reported ‘Ready to Be My Own Boss’ and ‘Wanted to Pursue My Passion’ as the top reasons for pursuing business ownership. The risk of leaving a comfortable corporate job has been worth the risk — 76 percent of respondents reported an eight out of 10 on a 10 point scale (10 being the happiest) when asked about their happiness as an entrepreneur.
So, what can you expect as an entrepreneur who’s thinking about starting a second career later in life? There’s a good chance that on the path to success you’ll also find happiness. And you’re not alone.
The Advantages to Starting a Business After 50 and How to Leverage Them
Becoming a business owner is always challenging but starting a business later in life comes with several advantages that will likely help make your path to entrepreneurship a smoother one. They key is knowing which resources to turn to.
Boomers Are Better Qualified for Small Business Financing
One of the biggest hurdles to becoming a business owner is attaining adequate financing. However, most men and women pursuing business ownership later in life are better-qualified candidates for small business funding.
Top 4 Factors for Boomer Small Business Financing
- Credit History – Your credit history can affect your eligibility for a number of funding avenues. In particular, most traditional debt-based lending options such as SBA loans, credit card financing, or other bank loans will disqualify candidates who don’t meet the minimum credit requirements, regardless of other eligibility factors. A longer credit history is often a healthier one and this works to your advantage.
- Home Ownership – A significant amount of equity in your home, or other major assets (e.g. a boat), can also make you a more attractive candidate for small business funding. One popular option for entrepreneurs is a Home Equity Line of Credit (HELOC), which leverages the value of your home as the main source of collateral for a loan. Additionally, SBA loans and other loans almost always require significant collateral for approval.
- Savings – Another major requirement for most small business funding avenues is a significant down payment. Having more cash-on-hand is a huge hurdle to overcome when applying for financing, and there’s a good chance if you’ve had a longer time to save while working in a reliable job, you’ll have a larger down payment available.
- Retirement Funds – As an alternative to debt funding, having more than $50,000 in your retirement account and also help you easily qualify for business funding. The Rollovers for Business Start-ups (ROBS) arrangement allows you to use retirement funds for small business financing — in a tax penalty free transaction. The funds can also be also be used as a down payment on an SBA loan.
One of the most important traits for business owners is self-awareness. It’s just as crucial to know what you don’t know as it is to recognize your strengths. And more time in different jobs has the ability to teach just that. Recognizing where you need additional support can help you build a strong foundation for your business. Whether it’s hiring a business lawyer or working with a payroll company, mitigating risk and relying on experts to fill in knowledge gaps in your business experience can help you avoid issues down the road.
A Larger Professional Network
Chances are, over your several years in the corporate world, you’ve had the opportunity to grow an expansive professional network. This can be an advantage in any work situation, but especially in building a small business.
Does your network include licensed professionals such as attorneys, real estate brokers, and CPAs? Or other successful small business owners? As you build your business, it’s a great time to call your connections who have experience in the field. You can bounce your business ideas off of them, learn which pitfalls to avoid, and maybe even utilize their services in a more formal way as your business grows.
Depending on your specific type of business and needs, you may end up hiring help directly from your network — and the larger your network, the larger your candidate pool. The more people you’ve built professional connections with, the more people who can help spread the word about the type of talent you’re looking to hire.
Successfully Starting Over at 50
Understanding the advantages of a longer professional career (and how to leverage) them may be the first step in building a foundation for your business. But there are additional, early steps you can take as an entrepreneur over 50 to ensure you’re on the fast track to success:
If you’re ready to pursue your passions and become your own boss, get started by taking first checking these off your to-do.
Pre-qualify for Funding
The advantages of pre-qualifying for small business funding are endless. Taking the time to pre-qualify, which is only a few minutes, provides you a full picture all of your funding options. Most people are qualified for more than they originally assumed, and if that’s not the case, you can get more information about how to improve your eligibility (i.e. raising your credit score). Once you know how much funding you’re qualified for, you can begin to make important decisions such as if you want/need to pursue debt financing as well as what kind of business you will open. Pre-qualification is free, and can be completed online in minutes. Get started here.
Get Qualified Business Advice
Talk to a business coach, franchise consultant, or business broker. If you’re not sure what kind of business you want to open (don’t worry — you’re not alone), talking with a professional is a great place to start. Buying an existing business or a franchise is a quick way to get a successful business up and running. If you haven’t explored these options or want to learn more, reach out to a business broker for a consultation.
Write Your Business Plan
Whether you’re planning to pursue debt financing, such as an SBA loan, which will require a written business plan, or not, it’s always a good idea to create a formal written business plan. The process of writing your business plan can help you more accurately price out your start-up and ongoing costs. It can also help you recognize any weak areas of your business that need more attention.
Picking the Right Business After 50
Choosing the right business is essential for any new entrepreneur. However, there are some misconceptions and considerations to keep in mind when starting a business after 50.
Connect with Your Clients
You’ll have a more natural time building a successful business if your target audience is a group you can either identify with or have a deep understanding of. While this may mean catering to people in your immediate age group, it doesn’t have to. For example, if you’re passionate about health and wellness, you can open a fitness studio where the primary clientele is younger, but your knowledge and expertise will still guide you toward success. Your age shouldn’t limit you to any type of business or industry. In fact — contrary to popular belief — the Kellogg School of Management found that entrepreneurs in the tech sector are 2.5 times more likely to fund success starting a business at age 40 compared to age 25.
Focus on Lifestyle
Starting a business is always hard work, but different types of businesses offer varying lifestyles. Whether you’ll willing and excited to put 60 hours into your business each week or are looking to be a little more hands-off as a business owner, this is a great conversation to have with a broker or coach. There’s no wrong or right choice — only the right choice for you.
Franchising is a great way to quickly launch as a successful business owner. And as an entrepreneur who’s more likely to be well qualified for small business financing, the higher start-up costs are more manageable. Learn more about buying a franchise here.
Mistakes to Avoid When Launching Your ‘Boomer’ Business
With your experience in the corporate world, chances are, you’re already aware of some of the possible pitfalls you can come across in business, but it’s wise to consider every angle. Avoid these mistakes as a Boomer business owner and stay on the path to success.
Taking on Unnecessary Debt
Making informed decisions early on, such as learning all the kinds of business financing you’re qualified for, as well as what kind of business you’re going to open (and learning how much financing you need) can help you avoid taking on unnecessary debt. Even if you turn to traditional debt financing methods, such as an SBA loan, consider making a larger down payment by utilizing a ROBS transaction. Having manageable monthly payments and better loans terms will make it possible to put more revenue earned back into your business.
Skimping on Support Services
When you’re starting out in business, it’s tempting to cut corners and save money by trying to do everything yourself. However, it can be more expensive in the long run if you make mistakes on crucial aspects of your business foundation such as accounting, payroll, or legal. Get expert help so you can focus on running your business.
Not Having an Exit Plan
Though you’re likely focused on building your new business, rather than selling it, it’s wise to include an exit plan into your long-term strategic roadmap. Whether you’re planning to sell the business, pass it down to a family member or employee, making this decision early on (or at least having an ideal scenario in mind) can help you make choices regarding the structure of the business, funding methods, hiring choices and business operations.
Becoming a business owner is a challenge at any age — but it’s an exciting and rewarding one. If you have the motivation to pursue a lifelong passion, build a business legacy or want to be your own boss, don’t let the date on your birth certificate stop you from achieving your dreams.