Starting a Business is Ageless

Merriam-Webster online dictionary defines entrepreneur as “a person who starts a business and is willing to risk loss in order to make money.” If you had to guess what percentage of new businesses are started by those 60 and over last year, would you have guessed 15%?  According to a story in the New York Times, that is the case.

According to a recent study published by the Kauffman Foundation and Legal Zoom, in 2013, about 20 percent of all new businesses were started by entrepreneurs aged 50 to 59 years, and 15 percent were 60 and over.

And, in fact, over the last decade, the highest rate of entrepreneurial activity belongs to those in the 55-to-64 age group, according to the Kauffman Index of Entrepreneurial Activity. (links added)

The article by Kerry Hannon, For Many Older Americans, an Entrepreneurial Path features a small business owner in Missouri who started her business as she was retiring. The article explains several reasons for “late in life” entrepreneurship: being your own boss, having a business that is meaningful to you, that has social impact, and a tough job market (see our earlier post on this topic).  The story of another small business owner’s attempt to get financing shows one of the hurdles faced by those starting a business.

The Kauffman Index, cited in the Times article, according to Ewing Marion Kauffman website is:

a leading indicator of new business creation in the United States. Capturing new business owners in their first month of significant business activity, this measure provides the earliest documentation of new business development across the country. Analysis of matched monthly data from the Current Population Survey (CPS) allows for comparisons of the percentage of the adult, non-business owner population that starts a business over time. In addition to this overall rate of entrepreneurial activity, separate estimates for specific demographic groups, states, and select metropolitan statistical areas (MSAs) are presented. The Index provides the only national measure of business creation by specific demographic groups.

The Kauffman-LegalZoom report, Who Started New Businesses in 2013 was released in January of 2014 and can be accessed here. There are some excellent charts within the report that sort the data in a number of categories. Need some quick stats for your class? Then use an infographic available here.

The Times article mentions an upcoming hearing by the Senate Committee on Small Business and Entrepreneurship.  The chair of the Senate Committee, Senator Landrieu of Louisiana, is quoted in the article that there is a need to rethink who is an “entrepreneur.”  She sees a significant impact for those starting businesses later in life: “'[s]enior entrepreneurs are especially critical to creating jobs and growing the economy, because they have the right experience and resources to be successful.’”  The article mentions a number of resources to help this group of new business owners.

The Senate Committee hearing is set for Wednesday, February 12, 2014 at 10:00 a.m. est. In Search of a Second Act: The Challenges and Advantages of Senior Entrepreneurship is a joint hearing between the Committee on Small Business and Entrepreuneurship and the Senate Special Committee on Aging.