Communications of the ACM
Older Entrepreneurs Start Companies Too
Credit: Bomgar Corp.
The conventional wisdom is that most American entrepreneurs are young and bold. However, as the Baby Boomer generation continues to age, it's now the case that older entrepreneurs are getting into the mix as well. While they have a reputation for being set in their ways and being unwilling to challenge the established order, the reality is actually quite different. The share of new business formation by the 55-to-64-year-old age group is up sharply over the past 15 years, from 14.3% in 1996 to 20.9% in 2011. At the same time, the self-employment rate for those over 65 is an astounding 26.9%. As a result, some researchers believe that the U.S. could be on the cusp of an entrepreneurship boom powered by an aging population.
People become entrepreneurs because they want to or because they have to. The first group tends to build more durable enterprises with human resource departments and capital budgets in a wide range of businesses. They'll attract angel investors and even venture capital. For example, among U.S.-born tech founders, those older than age 50 numbered more than twice as many as those younger than 25. Older entrepreneurs tend to have an edge in markets where experience and contacts are invaluable. People with experience know how to support their customers and how to price their product. Still, many of the startups founded by older entrepreneurs are sole proprietorships with a handful of employees at most.
Nevertheless, whether out of necessity or desire, older entrepreneurs have a number of competitive advantages in a knowledge-based economy. They're knowledgeable in their field. They have deep informal networks. Information technologies make it easier to work out of the home. Some older workers have been cherishing a dream, wanting to start their own business, and the time is now. Many different strands and trends are feeding into entrepreneurship with older people. There is growing evidence that the ranks of elderly entrepreneurs will swell. The trend will not only make the Social Security and Medicare bills easier to pay. It will boost the economy's underlying entrepreneurial dynamism.
From Bloomberg Businessweek
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