The Boomer is a column written for adults nearing retirement age and those already in their golden years. It will also promote reader interaction by posting e-mail responses and answering reader questions. E-mail your questions or topic ideas to firstname.lastname@example.org.
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When I was 28, I took a major risk for myself and my young family in purchasing a Dunkin Donuts franchise. I owned the business for approximately five years and quickly realized the demanding schedule the food industry requires to be successful. The shop was open 24 hours a day and yes, many times I was the guy leaving my house in the middle of the night to make donuts.
I was able to sell the business at a profit and decided to start my own franchise business-- selling tanning salons and equipment across the northeast. The franchise, called Tan American, took off. Despite being a new product, our sales were through the roof in just a short period of time. Not only was I operating a tanning salon that was so popular people had to book appointments a week in advance, I was able to sell approximately 15 new franchises. People quickly picked up this successful new niche and soon the market became so saturated it seemed as if a tanning salon was going up on every major street corner.
Once again, it was time to move on.
I have always been a risk taker, but as I age, I have become a lot more comfortable being more conservative with my business opportunities. According to a survey conducted by the Ewing Marion Kauffman Foundation , from 1996 to 2007 Americans between the age of 55 to 64 have consistently started more businesses compared to those ages 20 to 34. Boomers work experience and knowledge make them ideal candidates for entrepreneurship. Currently, boomers are increasingly looking to start their own business to supplement their nest eggs as many of us have watched our savings get wiped out by the economic down turn.
Starting a new business at any age is difficult, boomer entrepreneurs planning to retire soon need to be extremely careful they don't gamble and lose their life savings. This graying of entrepreneurship prompted me to contact Mary Beth Izard, author of BoomerPreneurs, How Baby Boomers Can Start Their Own Business Make Money and Enjoy Lifeto have her answer the following questions:
Boomer: Why are baby boomers starting businesses?
Izard: The economic conditions today certainly have triggered many baby boomers to want to go back to work and often they want to work in their own business; they don't want to work for someone else. With people being down sized and their retirement nest eggs taking a hit, these things have motivated people to want to earn income. But it goes beyond that, for a lot of boomers it has been a long-term dream they may have put on hold because of family obligations. There are also the boomers that did retire and they find that they are bored or want something to add a little more meaning and substance to their lives.
Boomer: What should baby boomers consider before starting their own business?
Izard: At this stage in their life they want to make sure that the business they start is something that is rewarding and something they enjoy doing. They want to look at what their goals are for their business. Is it to make money or to pursue a passion? They need to identify the lifestyles the business provides. Sometimes it seems like there is a disconnect between the kinds of business people are thinking about starting and how they want to live. For example, I have done some workshops that talk about starting retail stores and they talk about travelling and wanting to spend time with their grandchildren and that is just not a good match. They need to make sure the business affords them the lifestyle they want to live. They need to look at what assets they have to put into a business. Boomers need to look at that the way they invest in the stock market, what they can afford to lose to quantify what their financial risk propensity is and to still be able to sleep at night. You don't want to be laying awake at night at this age worrying about paying the bills you only want to risk what you are comfortable with.
Boomer: Is it best to start a business that is in or related to the field you were in before retirement?
Izard: By the time you are at retirement age, you have gained a lot of knowledge and experience, which we refer to as intellectual capital. Certainly to utilize that intellectual capital gives you a starting point that is much higher in terms of a learning curve compare to if you ventured out into a whole new field. Some people don't want to continue with what they have done for 20, 30 or 40 years so they will enter a whole new field. If that is the case, it is very important to be aware there is a steep learning curve when you are trying to survive with experience and have to learn things by trial and error. If you want to start in a new field, you might want to consider a franchisethe learning has been packaged for you. You may also want to consider adding an industry-experienced partner to offer insight and advice with any gaps in knowledge.
Boomer: What is better for boomers: opening a franchise or a start up? Why?
Izard: It absolutely depends on the person. If it is within your area of expertise, than a start up might be a very viable option. If it is a whole new industry, a franchise might be a good option. Even though the franchise provides a lot, boomers still will want to do their due diligence: research the franchise and the market opportunity to make that decision.
Boomer: What are a few of the major reasons that businesses run by baby boomers fail?
Izard: The reasons they fail are the reasons any business fails. In some cases there is under capitalization, these are businesses that may have eventually been successful, but they could not afford to stay afloat long enough. But this is true for starting a business at any age. I also think businesses that don't meet a market place need and are not selling what people are asking for could also lead to failure. Its important businesses be able to offer something that is somewhat unique in the market place. Poor management is another reason for failure. Sometimes the business idea is good but the implementation and execution of the idea can lead to failures.
Boomer: Are entrepreneurs born or made? What personality traits do baby boomers need to possess to start their own business in the later stage of life?
Izard: That is a proverbial question: can you teach entrepreneurship or are you born with it? I don't think there is a simple answer to that, but some people seem to be born entrepreneurs: by the time they are 5 years old they have their own lemonade stand to generate their own income. With other people, entrepreneurship is more like an like an evolution. Some people are entrepreneurs out of necessitysometimes referred to as an accidental entrepreneur. They start out small, offering a product or service in the market place and as that grows, they raise their expectations and their business aspirations.
Certainly there are skills you can learn like marketing and finance. It is really kind of a blend of innate characteristics and skills required to launch business and to make it grow. Some of those innate characteristics are confidence, self belief that you can carve out your own future, tenacity and perseverance. Entrepreneurs have an eye for opportunity; they can discern it in the market place--they know where there is a need for products and know they can do that better.
Boomer: How is starting a business a different process for baby boomers than for their younger counterparts?
Izard: Baby boomers always say they have more to use and more to lose. We have accumulated some skills and knowledge and have accumulated more intellectual capital along with resources (both financial and socially). Networking is a very critical skill to be a successful entrepreneur and hopefully by this age, we know a lot of people. Those are assets that younger people don't have to the degree when they are starting businesses. On the downside, boomers are older and have less time to recoup any lost funds; if we spend a number of years in a business and it fails, we are at a significant financial disadvantage. So, like anything there are pros and cons when you start a business at an older age.
Boomer: How can you minimize the risks involved in starting a business?
Izard: Planning and information is one way you minimize running into any problems. The more you know and the better you plan for something decreases the risk of failure within limits. You also need to quantify what risk you are willing to take financial: how much do you want to invest and still not jeopardize your retirement future or your childrens college education.
Boomer: Is now really a good time to start a new business?
Izard: With all that is going on in the economy many people are asking themselves this question. There are challenges with this economy, but becoming your own boss also offers many advantages. Jobs are hard to find right now and starting a business can put some of that control into your own hands and allow you to create a job for yourself. The other thing I look at is opportunity cost-- in a downturned economy sometimes opportunity costs are less.
If you have been downsized, or are unemployed, starting a business brings very little downside in terms of opportunity cost on that other than what you actually invest in terms of money and time. What is your time worth? If I am retired and I am playing golf, starting a business means my opportunity cost for time is a round of golf or lunch with my friends. I may be very willing to give that up and invest that time in a business. In a downturned economy certain costs are lower, rental space is cheaper and the cost of hiring people can be a little lower. In some economic situations, you can actually benefit from lower cost depending on the type of business that you are starting.
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