A growing number of baby boomers are leveraging a career’s worth of contacts and experience and setting up their own businesses, according to Guidant Financial, a small-business financing company.
In a recent nationwide poll, 54% of small-business owners were older than 50, a 10% year-over-year increase.
“Those who decide to start businesses later in life have several advantages over their younger counterparts,” David Nilssen, Guidant Financial’s chief executive, said in a statement.
“Baby boomers often have larger professional networks and years of business experience, and we’re seeing an increasing amount who are leveraging those benefits to launch and grow their own ventures.”
Guidant Financial conducted an email survey in December of some 2,600 male and female small-business owners and aspiring entrepreneurs in the U.S. age 18 and older.
Thirty-three percent of the sample were in their 50s, 17% in their 60s and 4% 70 or above. California accounted for the highest volume of boomer entrepreneurs, followed by Florida, Texas, New York and North Carolina.
These later-life businesspeople focused on the business-services, food and restaurant, general retail, health/beauty/fitness and automotive sectors.
Forty-three percent of 50-and-older respondents cited “ready to be my own boss” as their main reason for starting business, while 42% “wanted to pursue my passion.”
Others said an opportunity had presented itself or that they were dissatisfied with corporate America or had lost their job.
The data suggest that boomer owners are pleased with their decision to extend their business lives. Although the majority of them rated their confidence in the political state of small business as neutral, 76% rated their happiness level as an eight or above on a scale of 10.
A majority of boomer business owners said they were trying to grow or expand their business, while only 6% were looking to sell. Their biggest challenge, cited by 68%, was lack of capital/cash flow, but 67% reported that their business was currently profitable.
Some of the survey respondents had yet to start a business, but hoped to do so. Sixty-one percent of boomers in this position said their largest hurdle was inability to find funding.
Of these, nearly half said they did not have enough cash for a down payment or lacked knowledge about financing options. About a third said their credit score disqualified them for certain options.
Guidant Financial found that cash was by far the favored financing method for a new business, reported by 55% of boomer respondents, followed by 25% who use 401(k) business financing, which is formally known as Rollovers as Business Startups.
According to Guidant, ROBS funding allows anyone with pretax retirement funds to fund a business with some or all of that money without incurring tax penalties. The only requirement is a $50,000 minimum in a rollable retirement account.
ROBS can make it a lot easier to obtain funding to obtain without credit score or collateral requirements, Guidant said, noting that boomers use ROBS financing at a rate 28% higher than the national average.
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