Business Startup Success: Is the Owner's Age a Factor?
People 50 and older are responsible for about half of all business startups in the U.S. Although the exact figure varies from year to year, it consistently hovers near the 50 percent mark.
Yet startup success stories in the headlines are usually about twenty- and thirty-somethings whose genius and shrewed marketing propelled them to astounding wealth. How often do you hear success stories about a business started by a 60-year old?
This then raises the question: are encore entrepreneurs less likely to succeed than their counterparts who are young enough to be their children or grandchildren?
Business Startup Success — What the Data Says
For a website and inbox magazine like mine, devoted to encore entrepreneurs, it's a vital question to address. If nothing else, ethics alone requires me to address it. If indeed businesses started by older entrepreneurs are far more prone to failure than those launched by younger generations, can I ethically encourage people 50 and above to step out and start a business?
The fact is, there is plenty of data that points to a correlation between the age of an entrepreneur and a startup's prospects for success. And the data suggests that older entrepreneurs are actually more likely to succeed than those in their mid-forties or below.
And what is particularly interesting is the relationship between the age of a business owner and the company's ability to survive a sharp economic downturn. In circumstances like this, the older entrepreneur has a decided edge.
Survival Rates Among Business Startups
To illustrate, let's look at the track record for startups which began ten years ago, in 2004. The Kauffman Ewing Institute did a longitudinal study on 5000 of these businesses. Of the companies analyzed, 48% were started by people older than 45. The Institute published its findings in 2012. (Sorry, I can't send you to the report itself, because the link I have to it is no longer good.)
By the time of the study, many of the 5000 companies were no longer in business. Yet amazingly, of the ones still operating, 64% had been started by an older entrepreneur. This means that, compared to entrepreneurs in the younger cohort, encore entrepreneurs were significantly more likely to launch a successful startup.
Keep in mind that the time span of this study included the economic meltdown of 2008. The higher survival rates of startups by older entrepreneurs thus argues that they have greater "staying power" when the economy goes south.
Another study from Kauffman, this one in 2009, indicates that companies which attain high growth rates are more likely to be founded by men and women over 55. Working with Kauffman, a Duke researcher analyzed 500 businesses which clearly qualified as high-growth companies. Of the companies which made the study, twice as many were started by older entrepreneurs as were launched by someone younger than 35.
The case is fairly clear, then, that age should never be a deterrent to entrepreneurism. In fact, the fastest growing high-tech company in the Kauffman/Duke study was begun by an entrepreneur who was 68.
Battling Our Own Self-Doubts
The primary purpose of this article, however, is not merely to defend my advocacy of encore entrepreneurism. I also want to qualm the doubts that I sometimes hear from my peers about their ability to start a successful business at their age.
Our generation has been outspoken about actual or perceived age-bias in the workplace. Yet some of us are prone to impose an age-bias on ourselves when it comes to starting a business. You might call it "self-discrimination."
I hear this "self-discrimination" frequently from older workers who have lost a job. When I encourage them to consider a startup, their knee-jerk response is, "I'm too old to start a business." As my grandmother used to say, "Hogwash!"
The Advantage of Being an Encore Entrepreneur
The fact is, older entrepreneurs enjoy an enviable advantagious position. For one thing, they can draw on a lifetime of experience and a large network of accomplished acquaintances to help them build a business. They have no lack of peers who can be mentors, investors, co-workers, or even partners in a startup.
Moreover, encore entrepreneurs have lived through several economic booms and busts. They know that bad times don't last forever. Nor do the good times. Having experienced these cycles repeatedly, they have acquired the valuable wisdom — the wisdom to manage expenses judiciously when business is good and the long-term perspective to steer clear of panic when business is struggling.
Now, admittedly, not everyone is cut out of the fabric to be successful as an entrepreneur. Some people don't have the temperament for it, the discipline for it, or the heart for it. And you will find as many of these people in the younger generation as in the older one. So there are a variety of valid reasons to forego starting a business. Age is not one of them.
Share Your Wisdom
What advantages do you see that work in favor of encore entrepreneurs? I would love to hear your thoughts on this subject. Please share your observations in the Comments section below.
This article first appeared in Encore Entrepreneur inbox magazine on January 30, 2014.