Instead of slowing down and embracing retirement, a great many baby boomers are opting to start their own small businesses instead, according to a survey recently taken on the subject. Surprisingly, entrepreneurs over the age of 50 currently comprise more than half of all American small business owners, with 33% of all small business owners being between the ages of 50 and 59, 17% being between 60 and 69, and 4% being aged 70 and above. The most popular types of small businesses are business services, food and restaurant operations, automotive enterprises, health and fitness clinics, and general retail businesses.
Why baby boomers are starting their own businesses
The biggest reason people aged 50 and above are starting up their own businesses rather than settling down and retiring, is that they desire to pursue a passion they’ve always had. More than 42% of respondents in the 2018 survey indicated that they started up a business to satisfy a lifelong dream, while 36% declared that the opportunity just became possible. Another 22% claimed to be completely dissatisfied with existing businesses in America, and the last 15% announced that they started up a business because they were laid off. Some respondents provided multiple answers, which accounts for the percentages being greater than 100%.
Profitability of baby boomer businesses
In the same survey, more than 67% of all baby boomer business owners declared that their companies were profitable at that moment, and that probably accounts for the more than 76% of baby boomers surveyed who indicated that they were happy with the way things were. The majority of these businesses employed between two and five employees, while 32% were sole proprietorships, and just 12% employed more than six people in the company.
The vast majority of baby boomer business owners started up their businesses from scratch, with only 14% of all owners surveyed saying that they purchased existing franchises. Most of these entrepreneurs financed their small businesses with their own private cash assets, with approximately 25% saying that their 401(k) plans were used as startup capital. Other financing came from friends and family, unsecured loans, and lines of credit.
Challenges for baby boomer businesses
Respondents in the survey indicated that the biggest challenges they faced in the startup of their small businesses were lack of capital or cash flow, with 68% of all small business owners citing this as their number one problem. Approximately 30% of owners indicated that marketing and advertising was an enormous challenge for them, especially given the requirements of digital marketing in today’s world.
Information obtained from the same survey indicated that there are huge numbers of individuals aged 50 and above who were interested in starting their own businesses, but who are at least temporarily unable to overcome the challenge of acquiring sufficient capital to do so. Many of these same individuals indicated that they were not aware of all financing options, but intended to make themselves more knowledgeable in this area, so that they could have a chance of acquiring the necessary startup cash.
In addition to insufficient capital, other would-be entrepreneurs were waiting for the right opportunity, or were unsure how to go about starting up their own business. A few declared they were not ready to leave their jobs yet, but looked forward anxiously to starting their own businesses when they did decide to walk away from their present employment.
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