Place for age and wisdom

Jan 23 2008 by Chris Knox, The Journal

You are never too old to start your own business and many do. But becoming an “oldtrepreneur” has its own problems, discovers Christopher Knox.

WITH many people claiming that 50 is the new 30, should 50-year-olds be more prepared to go it alone and set up their own business and should 60 and 70 year olds be putting off retirement in order to run their own business empire?

For many, launching a start-up can prove one of the only ways to find employment in their later years. Christopher Knox looks at what it takes to start a business at such a mature age and asks why so few are doing it.

The last few years has seen TV programmes such as Dragons’ Den and Tycoon help make setting up a new business fashionable and have helped to re-energise the UK’s now thriving enterprise culture. In fact the latest survey by YouGov revealed that half of all adults in Britain have considered going it alone.

In addition, almost two-fifths of UK adults reported some likelihood that they will start their own business in the future, while 16% said it was very likely while 23% said it was somewhat likely.

However, one might think that with age comes the desire to be your own boss. Not so indicated the research, with 60% of 25 to 34 year olds aspiring to lead, compared with 42% of 55-plus year olds.

With so many people detached from the UK’s labour force due to early or forced retirement, an estimated 3.5 million, the economy is seriously suffering from a lack of entrepreneurial activity among the over 50s, with only one in six start-ups launched by senior entrepreneurs despite the fact that many still have a third of their life ahead of them.

According to the Office of National Statistics (ONS), the number of people aged 50 and over is expected to rise from around 20 million to 24.5 million by 2020, an increase of nearly a quarter. At this rate, the number will have risen to 27 million, or 40% of the population, by 2030.

Add to this the likelihood of securing another job after the age of 50 is one in 10 and the option of becoming self-employed may be one of the few options left open to a great number of people still seeking an income.

So what is putting so many over-50s off the route of business owner?

Securing enough capital can certainly be an obstacle, with many older entrepreneurs finding that the major banks and investment institutions are less willing to gamble on what they may see as a short term risks, as the entrepreneur has less time to correct their business if it runs into difficulty.

Some older entrepreneurs may also find that they have a poor credit rating when seeking finance. This is because many will have avoided credit for most of their lives and, apart from a mortgage, will not have shown that they are able to pay back an additional loan.

One entrepreneur that experienced this first hand was Hebburn-based Bill Patterson, who set up cafe Butterfingers in Jarrow three years ago after leaving his 25-year career as an offshore scaffolder due to ill health.

The 59-year-old said: “I was at a funny stage in my life where I was too young to retire but was finding it difficult to find a job because of my age.

“However, when I tried to get a loan from a number of banks and local funding bodies to start a business they wanted nothing to do with me. I definitely think there is a problem with ageism when trying to start a business.”

In the end, Bill was pointed in the direction of Prime, a business advice service focused on what they term “oldtrepreneurs”, which was able to provide him with the £5,000 he needed to start-up. Although its funding has now dried up, Prime still works to make retirees aware of the advantages of starting up and is currently lobbying Government on a number of issues that would make the process easier.

These include opening a loan stream for those aged over 50 who are outside the banks’ credit system and waiving tuition fees for some training courses.

Laurie South, director at Prime, said: “The Government’s focus has very much been on young people and this has led to older people feeling that they have been shut out of the cut and thrust of the business world.

“In fact older people should be seen as a safer bet when starting a business. They have more experience and a number of life skills that will ensure that they don’t make any rash decisions.”

This opinion is backed up by Government figures which show that older entrepreneurs are twice as likely to succeed than younger ones, a fact that Will Pratt, managing director of enterprise support group InBiz, says should stir more people into action.

He said: “In terms of people who are aged 50 and over, sometimes undertaking setting up your own business can appear to be even more daunting than usual. However, there is absolutely no reason to think that age should be a barrier to entrepreneurship; in fact in many respects setting up your own business slightly later in life has many advantages since often parental responsibilities have been lightened and people are free to concentrate on hobbies and other personal and business aspirations.”

After working as an employee for much of their life, many older entrepreneurs will not want to contend with all of the usual stresses and strains of a sole trader. In this situation, even the most frugal may need to consider employing the expertise of friends or family members in order to get up and running.

This was certainly the case for Jean Smith, who set up her Morpeth-based walking stick company Switch Sticks with niece Vicky Mitchell after retiring from her job running a linen store in Alnwick.

She said: “I couldn’t have done it without Vicky. She handles a lot of the business, from keeping track of the finances to taking care of the marketing. I wasn’t sure about setting up the business but she gave me the confidence I needed.”

As Jonathan Gold, director at NStar Finance and Business, stresses, working out how your business will continue or how it will look to potential buyers once you are unable to continue running it should be a primary concern.

“From the get-go you have to have your business in a fit enough state to seem attractive to potential buyers.

“Everything needs to be transparent so someone can just come in and take over the reins as easily as possible.

“Time can be precious for older entrepreneurs so they have to be extremely organised.”

Whatever the reason for starting up later in life, it is clear that older and wiser heads have their place in the UK’s enterprise culture.

Senior Start-up

Contribute £24.4bn to the UK economy

Average turnover is £67,500 a year

Account for one in six start-ups

Two-thirds regret not setting up earlier

Source: Vanson Bourne