Mid-life Entrepreneurship is Alive and Well!

One of the most gratifying things I get to do is work with entrepreneurs and business owners to optimize their businesses. In the area where I live, most of the media attention is focused on technology startups usually run by people in their 20s. What I find interesting about the new businesses in our area is that the founders who are willing to rent an office and hire a consultant or take some classes tend to be mid-life entrepreneurs. These older entrepreneurs actually are more prevalent than the younger ones. Dane Spangler, a researcher at the Ewing Marion Kauffman Foundation wrote in a 2009 report, “in every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34.” Also, according to the 2011 Global Entrepreneurship Monitor U.S. Report — a survey of a representative sample of the U.S. adult-age population — 15.4 percent of Americans aged 55-64 and 12.8 percent of Americans aged 45-54 run their own business, compared with 0.8 percent of Americans aged 18-24 and 4.9 percent of Americans aged 25-34.

midlife-entrepreneurOne of the most gratifying things I get to do is work with entrepreneurs and business owners to optimize their businesses. In the area where I live, most of the media attention is focused on technology startups usually run by people in their 20s. What I find interesting about the new businesses in our area is that the founders who are willing to rent an office and hire a consultant or take some classes tend to be mid-life entrepreneurs. These older entrepreneurs actually are more prevalent than the younger ones. Dane Spangler, a researcher at the Ewing Marion Kauffman Foundation wrote in a 2009 report, “in every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34.” Also, according to the 2011 Global Entrepreneurship Monitor U.S. Report — a survey of a representative sample of the U.S. adult-age population — 15.4 percent of Americans aged 55-64 and 12.8 percent of Americans aged 45-54 run their own business, compared with 0.8 percent of Americans aged 18-24 and 4.9 percent of Americans aged 25-34.

Shane asks (as you might), “Why are baby boomers more likely than their kids to be entrepreneurs?” He goes on to answer his own question:

Researchers have two hypotheses, the second more plausible than the first. The first explanation is a cohort effect: Today’s young people don’t want to run their own businesses as much as their parents did were when they were young. The more plausible explanation is an age effect.

The reason Shane provides for the cohort effect being a weaker argument is a body of research conducted at UCLA within the Cooperative Institutional Research Program (CIRP). CIRP points to a trend over the past quarter century whereby college freshmen are less likely to want to be a “business executive,” “accountant,” or “actuary.” Instead, a higher percentage want to own a business now than previously.

So, while more freshmen want to be business owners, fewer people in their early twenties are actually starting businesses. This is where the age affect provides an explanation. Those who prefer this argument would say that the experience gained and savings accumulated over a period of fifteen years or more give one more confidence to start a business later in life. While there are certainly more responsibilities for the stereotypical midlife entrepreneur on the home front, this age group appears to have figured out how to address those responsibilities and still be willing to start businesses at a higher rate than the younger counterparts.

What’s holding you back? Start a business as a second career!

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