Old Is the New Black
Old Is the New Black
Especially when it comes to starting a business.
Some years ago, Karen Venable was in her 50s and newly divorced when a friend asked if she would like to be her housemate. Venable said yes. “It became something of an eye-opener,” she recalls.
Venable had previously worked as a financial analyst for a utility company, a consultant for energy companies internationally and then had started a custom displays business. Her roommate experience gave her an idea for another startup. She realized there were tens of millions of baby boomer women in the United States, many of them single with few means of connecting with one another. In May 2014, she founded Roommates4Boomers, a “Match.com meets Golden Girls” roommate service for women 50 and older.
“I can’t believe it’s not going to take off,” she says. “It could be profitable within a year.”
Venable is but one of a burgeoning number of men and women 50 and up who have become entrepreneurs. A Gallup poll this year found that baby boomers were more than twice as likely as millennials to say they plan to start a business in the next 12 months.
People 55 to 64 comprised 23 percent of new entrepreneurs in 2013, compared to 19 percent in 2003, according to the Kauffman Index of Entrepreneurial Activity. In 1996 the proportion was 14 percent.
“What might be more startling to many observers is that Americans in the 55-to-64 age group start new businesses at a higher rate than those in their 20s and 30s,” said Dane Stangler, vice president of research and policy at the Ewing Marion Kauffman Foundation, in testimony before two U.S. Senate committees last year.
These trends come as universities are increasingly offering entrepreneurship courses. Drexel University in Philadelphia even offers a bachelor’s degree in entrepreneurship and innovation and plans to add a master’s. Teen summer camps and seminars as well as competitions for cash and prizes also add to the common misconception that entrepreneurship is a young person’s game.
Many older Americans became entrepreneurs out of necessity when they lost their jobs in the recession and were unable to find new positions that paid comparably. Others, however, reflect the changes in the world of work, where employees no longer stay at a company for 30 years and collect a pension when they retire. And still others, such as Venable, discover a niche market—often age-related—and capitalize on it.
Debbie Banda, AARP interim vice president of education and outreach/financial security, points to longer life spans as another factor.
It used to be that life’s arc progressed from childhood to working years to old age and retirement, she says. Now people are remaining relatively healthy later in life, and they want to stay active, she says. For many, that means more than playing golf. “They want to know what to do with that time, and they want to do something different,” Banda says.
“People prize their freedom,” says Mary Furlong, professor of entrepreneurship at Santa Clara University and president and CEO of Mary Furlong & Associates. “The only thing we have left is time. And we don’t know how finite that time is.”
Experience Plus Passion
Some of these encore entrepreneurs create companies related to what they did during their careers, relying on the expertise they acquired. Others start businesses that allow them to pursue lifelong passions. For Joe James, it’s both.
James was a science major at a New York college when Martin Luther King Jr. was killed. King’s efforts to achieve economic empowerment for minorities “inspired me to forgo science for a while,” James says. Instead, he worked for 34 years in economic development in cities, urban counties and the state of South Carolina before retiring in 2004.
Driving the Interstate 95 “Corridor of Shame” in the Palmetto State, he was appalled by the miles of impoverished, rural communities populated mainly by African-Americans. “I thought it was a heck of a challenge to figure out what to do about that,” he says.
James started by creating a nonprofit to spur economic development in those areas. He got financing from the U.S. Forest Service to help farmers convert forestry byproducts to biofuel, and to plant oil seed crops, such as canola seeds, for the same purpose. He also started farmers’ markets in Columbia’s inner city to give poor people access to fresh, healthy produce while expanding the market for black farmers’ crops.
In 2008 Encore.org awarded James a $100,000 Purpose Prize, which is given to people 60 and older who are creating new ways to solve social problems. James formed a for-profit company, Agri-Tech Producers, and invested the money, along with federal and state grants.
Agri-Tech is relying on technology developed at North Carolina State University to manufacture equipment that uses torrefaction, a heating process that sustainably converts plant and wood matter into biofuel and other products. These include bio-fuel that burns cleaner than coal, and biochar, a charcoal that can be used as fertilizer.
Agri-Tech also is working to clean up pollution in Chesapeake Bay. Runoff from hundreds of area chicken farms ends up in the bay, where it fertilizes algae blooms that smother the water’s oxygen and kill fish and shellfish.
James envisions planting crops, such as a special type of sorghum, with root systems that would draw contaminants out of the ground. The plants would be harvested at the end of each season and chopped up to make bedding for the chickens on those farms. Eventually the bedding would be converted to biochar.
Agri-Tech should have a pilot torrefaction plant operating in South Carolina by the end of this year, James says. In the meantime, he’s also exploring potential projects in Haiti and in Africa.
James loves combining his interest in science with his economic development know-how. “I’ve never been as excited about getting up in the morning or staying up all night as I am in trying to get this going,” he says. “I’m highly motivated and energized by what we’re doing.”
James, 68, brought some advantages to the startup table that younger people may lack, such as maturity, experience and a network of business and social contacts.
Mother of Invention
That’s also true of Howard Tischler, 61, who spent 40 years in software technology, first as a developer and then in management, before founding EverSafe. It’s a technology service aimed at the growing elderly population that helps detect unauthorized credit card use, dubious cash withdrawals, changes in spending patterns and more. The impetus: his elderly mother.
Tischler’s mother was legally blind, didn’t own a car and didn’t possess a driver’s license, so he and his brothers were perplexed when they examined her finances and learned a telemarketer had coaxed her into buying an $80-a-month auto club membership. They soon discovered other instances in which she had been financially exploited.
Tischler saw a business opportunity in his mother’s misfortune that could help other seniors. “Nobody was looking at the total financial picture to see what’s going on,” he says. He launched EverSafe last October. Subscribers link their financial accounts to EverSafe, which pulls a credit report on them to establish a baseline of financial activity. A software program then detects anything suspicious, such as dramatic increases in ATM use or sudden surges in spending.
A daily report goes to subscribers and as many trusted advocates as they wish. The monthly fee is $4.99 to $19.99, depending on the plan. “We tried to price this so a majority of people in the marketplace can afford it,” Tischler says.
Tischler financed the initial phase of the startup himself, but has since obtained investors. He’s marketing EverSafe via Internet search engines and display ads, and through organizations that help the elderly. He plans to begin TV and print ads later this year, and hopes to be profitable by 2017. Based in Columbia, Md., the company has seven full-time and two part-time employees. Among them: Elizabeth Loewy, who headed the elderly abuse unit at the Manhattan District Attorney’s Office for many years and now serves as EverSafe’s general counsel and vice president of industry relations.
“To build something that protects a particular group is very satisfying,” Tischler says.
Prepare to Launch
For older workers lacking Tischler’s business background, there is a wealth of programs and services geared specifically to helping them launch a startup. AARP and the Small Business Administration collaborate on courses, workshops, webinars and more to educate people 50 and older on how to start or grow a small business. There’s also a venture accelerator called Encore Entrepreneur Program designed for people in the 50-to-65 age range. And the Kauffman Foundation has partnered with other organizations and provides 10-week FastTrac courses for aspiring entrepreneurs 50 and older.
“From what I’ve seen, probably more than half of them have pursued their business endeavors,” says Michele Markey, vice president of Kauffman FastTrac.
Regardless of their backgrounds, boomer entrepreneurs need to do the same homework as younger ones. “Very few small businesses are successful on luck alone,” Banda says. “It’s a lot of hard work.”
That means determining what the market is for the product, developing a business plan and figuring out how to finance the company. “Venture financing is nearly impossible for people over 50,” Furlong says, especially for women. She explains that most people over 50 build smaller lifestyle and services businesses that rarely reach the scale that a venture capitalist would need to see to justify an investment.
Experts caution all but wealthy encore entrepreneurs against tapping retirement funds for a startup. “The math has to work differently,” Markey says. “You don’t have 20 years to recover from a big mistake.”
The temptation for some might be to think that a great concept is all they need to succeed. “I think the greatest skill they need is managing the money in the business,” Furlong says. Encore graduates who fare best, she adds, are those who spend “the same amount of time on the business side as the creative side of the business” or who designate somebody to focus on the area in which they are weakest.
Now Is the Time
Fortunately, starting a business costs less than it used to. Marketing and selling products can be done via the Internet, and often there is no need for a bricks-and-mortar infrastructure. Most independent businesses are started with an initial investment of $5,000 or less, according to a 2012 report by MBO Partners, a company that provides services to independent professionals.
“We had enough income to finance the first part” of Roommates4Boomers, Venable says. Her service mirrors Internet dating. Visitors to her website create a personal profile with information such as whether they smoke, are neat or messy, and what sort of housing situation they desire. They can peruse the website for free, but pay a monthly $29.99 subscription fee with a two-month minimum if they find somebody they wish to contact. “I put a lot of thought into how to position ourselves,” Venable says.
Venable has started strong in specific markets on each coast and is now preparing to expand her reach nationally with social media and television ads. She has five part-time employees and says her biggest challenge has been figuring out “how to gain momentum and where to put advertising dollars to get that.”
Venable has this advice for aspiring encore entrepreneurs: “Don’t be overwhelmed by fear. It’s a great time of life to be doing something different.”
Furlong agrees. Technology has made it easier than ever to work from home. With the inexorable aging of the vast baby boomer population, it’s clear that the influx of older entrepreneurs is here to stay, Furlong says. She predicts, “It’s only going to grow.”