Starting your own business feels a lot like taking off on a zip line. The first step off the platform is exhilarating and terrifying, but you quickly realize you are wearing a harness and are attached to the line, says Stephen McCauley, 53, who has his own marketing communications firm in Arlington, Virginia. You know you wouldn’t have made this decision if it didn’t make sense, so you think, “I’m tethered. I’m OK,” he says.
McCauley has experienced the excitement and fear of starting a company. He toyed with the idea for years, but it wasn’t until he was approaching his 50th birthday that he realized the time was right personally, professionally, and financially.
After working for 28 years for two global public relations firms, McCauley knew how to manage global teams and clients but wasn’t sure how to run his own shop. “I bought a handful of books about small business and then dove in.”
He decided the best approach was to treat himself like one of his former clients. He wrote a detailed business plan and concept proposals to make sure his ideas would resonate with potential clients. Then in 2014, he launched the Ginger Network, which provides communications advice to commercial food and nutrition clients. His team includes two dozen consultants seasoned in market research, publicity, nutrition science, and the culinary arts.
The bottom line today: He’s making as much money as he did when he was working for large companies, and he’s excited about all his projects. “I was always an enthusiastic person about my work, but I never knew it could be so much better.”
More people who are 50 and older are starting their own businesses, often pursuing lifelong dreams and passions. In 2015, almost a quarter of all new entrepreneurs were ages 55 to 64, up from 14.8 percent in 1996, according to the latest data from The Kauffman Index of Startup Activity.
Some people form a consulting firm, while others open a restaurant, art gallery, dog-walking service, landscape firm, or tutoring company. Many pursue an idea they had in the back of their minds for years.
Identify Your Motivation
Their motivations for taking this step vary. Gallup surveyed 229 entrepreneurs over age 50 who began businesses later in life and found that 32 percent started their own ventures because it allowed them to be independent; 27 percent wanted to pursue their interests and passions; 24 percent wanted to increase their incomes. Only 10 percent said they pursued an idea for a new product or service that solves a problem or meets an unfulfilled need in the market.
Most of them were not pursuing high-growth businesses. Instead, they were tackling ventures that allowed them to stay engaged, earn income, remain productive, stay inde-pendent, and pursue something they love, says Sangeeta Bharadwaj Badal, principal scientist for entrepreneurship and job creation at Gallup and co-author of Entrepreneurial StrengthsFinder, written with Jim Clifton.
About half of the entrepreneurs created businesses in professional, technical, scientific, educational, and healthcare-related fields, Badal says. “Some became part of the maker movement to create and sell products they’re passionate about,” she says.
To identify the talents needed to create a thriving venture, Gallup studied 2,500 entrepreneurs of all ages. The results show that the top 10 qualities of successful business owners include a profit-oriented focus, confidence, creative thinking, the ability to delegate, determination to overcome obstacles, independence, the drive to acquire in-depth knowledge, the talent to promote the venture, the ability to build relationships, and the skill to manage high-risk situations.
Very few people are strong in all these qualities, Badal says. Would-be entrepreneurs should think of these talents as a checklist to figure out what they’re good at and where they may need to form partnerships or delegate responsibilities to get the best results, she says.
People over 50 are often seeking purpose, passion, and a paycheck, says Marci Alboher, vice president for communications at Encore.org and author of The Encore Career Handbook. Those who seem satisfied with this stage of life tend to share common characteristics like flexibility, a desire for lifelong learning, and a certain amount of patience, as transitions always tend to take a while and involve lots of detours, she says.
Polish Your Skills
Being flexible, patient, and persistent paid off for Melissa Ford, 58, of Oak Park, Illinois. She had a private law practice for 10 years before she quit to raise her two children and help her husband start an interior and exterior signage company.
For several years, she and a friend dabbled in helping others launch businesses, but they struggled to make money, partly because they didn’t have an effective sales strategy, she says. As she approached 50, Ford decided it was time to create her own solo entrepreneur venture as a business and life coach. She didn’t want to get to the end of her life, and say, “I never really gave it a shot.”
She knew her biggest weakness was her inability to sell her services, so she hired a business coach who understood the philosophy of service, which is helping someone before they even pay you. He taught her that if she could make a big enough impact in people’s lives, they would see the value of continuing to work with her as paid clients.
Testing her coach’s advice, Ford began taking on prospective clients for no charge. If they found that her suggestions worked, they’d hire her. Using this service strategy, her business boomed.
She now earns six figures coaching entrepreneurs in service-based industries, including photographers, personal chefs, dietitians, attorneys, and coaches. Many people are very talented at their craft but have no idea how to sell their services, she says. When they move from hating sales to loving it, their businesses prosper, Ford says.
Weigh the Risks
Not surprisingly, some people are skeptical of taking the first step of launching an enterprise. They’re afraid of losing money or failing in front of their families and friends. However, successful entrepreneurs are not risk-takers; they are calculated risk-takers, says business consultant Leonard Green, co-author of The Entrepreneur’s Playbook.
When Green was in his 70s, he helped with the creation of Blue Buffalo pet food. After the company started growing and needed more funding, Green took a mortgage on his home. He says this was a calculated risk because he believed in the company and saw the potential for growth. That said, he advises his clients not to invest more money than they can afford to lose, which is generally no more than 10 to 20 percent of their net worth.
Smart business owners find ways to reduce risk in everything they do, he says. They do their homework, figure out what the competition is doing, and then take small steps toward their goals. They ask themselves how they can make each step more cost effective and produce better value than they planned. They make sure they have enough money when they begin and then manage what they have carefully, Green says.
Rather than trying to invent something entirely new, entrepreneurs should study what the competition is doing and then improve on the quality, pricing, or service of their competitors’ products or services. People over 50 are often equipped to do that because they have the time, expertise, negotiation skills, desire, and experience it takes to succeed, he says.
Pursue Your Passion
The trick to most ventures is to find something you are passionate about. Inside every entrepreneur is a dreamer, says Michael Maloof. He and his wife, Michelle, sold two multimillion-dollar software companies. One they started; the other one they took over when it was struggling. Now Maloof consults with the owners of new businesses.
His companies made software products for small to medium-sized businesses. “We took great pride in how we helped protect and grow these businesses,” says Maloof, author of The Startup Survivor. There’s nothing quite as rewarding as seeing your dream become a reality and building something of value, he says. You don’t have to make a lot of money at your venture to find it gratifying, he says. If you’re helping others in some way, the feedback is incredible, he says.
“People can create businesses out of their passions, as long as they recognize the skills they need help with,” McCauley says. Accounting has been one of his biggest challenges. He has learned to pay close attention to it and get professional help.
Running your own business is a lot like parenting because you are never completely off duty. Your company is your baby, McCauley says. You always have your kids in the back of your mind, and the same can be said about your own company, he says. It’s passion that drives the work and the growth. “As frightening as it was to take the leap, I can’t believe I didn’t do it sooner,” McCauley says. “It has been amazing.”
Steps to Becoming an Entrepreneur
Entrepreneur Michael Maloof, author of The Startup Survivor, offers these tips for launching a business:
Define your idea
The best chance of success will be your ability to focus on building solutions to problems that customers will pay you to solve. You should be able to define your business in a succinct answer that is your elevator pitch to customers and investors.
Float the concept
Talk to people about what you’re doing to see if you’re on the right track. The sooner you involve potential customers and buyers, the more likely you are to build something they actually need. Investors are always anxious to see whether prospective customers are involved and to what extent.
Listen and learn
Successful entrepreneurs recognize that there’s a lot they don’t know. They seek advice. People who are not coachable are going to fail. There are a lot of areas, such as bookkeeping, that you need to be good at when you’re starting a business.
Tackle one idea at a time
Entrepreneurs tend to be idea factories, but they need to stay focused and do what is necessary to get out the minimum viable product. The faster you get to the market with something useful, the more time and money you’ll have for future generations
Focus on profits
Profit should be the goal from day one. The question for each purchase and investment from office space to marketing campaigns should be: Will this accelerate profitability?
You will need to surround yourself with talented people to build and grow a company, but your best chance of success is to stay as lean as you can for as long as you can. Too often, new business owners hire too quickly and create cash flow issues.
Adapt when necessary
Occasionally the original idea, while promising, was not the best idea. If you discover a flaw in your product or market, step back and consider the options. A pivot isn’t something you seek; it’s a reality you face.