Older entrepreneurs have experience, resources on their side

October 13 12:05:01 PM, LA Times

Success more often finds those with assets such as experience, cash and contacts. A new wave of baby boomer entrepreneurs likely to be unleashed by the current economic turmoil will be an important force in eventually pushing the economy onto safer ground, some experts say.

A new wave of baby boomer entrepreneurs likely to be unleashed by the current economic turmoil will be an important force in eventually pushing the economy onto safer ground, some experts say.

A late-September poll by the Kauffman Foundation, which promotes entrepreneurship, showed that 70% of respondents agreed that the success and health of the economy depended on the success of entrepreneurs; 80% agreed the government should encourage more entrepreneurship.

Though many people think of entrepreneurs as twentysomethings laboring in their garages on the next Silicon Valley success, the reality is that people age 35 and older have higher entrepreneurship activity rates, a separate Kauffman study found.

"People in the older age brackets are much more likely to successfully start companies than younger people," said Tim Kane, economist at the foundation and co-author of the organization's Growthology blog.

Older workers or professionals often "have personal savings they rely on, and they've actually worked in an area and know a sector -- it might be a steel factory -- where they have an idea that their company is not willing to get behind," he said.

Consultant Joe Stevens is a good example. The Marina del Rey resident was in his mid-50s in 2003 when he lost his job as a bank executive. That job had been a lifeline when his prior position was also lost in an acquisition, he said. That was in the healthcare field, where he'd worked since he was 23.

"I was really hung out to dry," Stevens said. "It was my age. I felt I had no other option but to start a business."

He looked to his work experience to find a need to fill. As former chief operating officer at a firm that assembled medical equipment, he knew firsthand how a well-designed safety incentive plan could cut injuries and thus reduce pricey workers' compensation insurance premiums.

He sold his condo to fund the first year of Bridge Consultants Inc. and struggled to convince potential clients when he had no customers who could provide references. By the end of the year, he had made $27,000.

That was in 2003. Today, Stevens said his Playa del Rey firm employs three people and he expects sales of at least $500,000 this year.

Potentially thousands of baby boomers could try to follow his lead as jobs are lost or jeopardized by the economic crisis.

"The older you are, if you are still in the workforce, the more likely you are to be an entrepreneur," said Ed Rogoff, the academic director of Lawrence N. Field Center for Entrepreneurship and Small Business at Columbia University and a management professor who has studied older entrepreneurs.

"That is a growing trend generally, but I think what has happened in the economy lately is going to push it up considerably," he said.

More contacts, less tolerance for risk

In addition to more money, even with lower home values and shrunken stock portfolios recently, older entrepreneurs often start off with larger networks of contacts. That's a crucial strength and provides the beginning of a customer base, Rogoff said.

On the downside, older entrepreneurs may have less of an appetite for risk.

"If you are 26 years old and bet the farm and you lose it, you start over," he said. "If you are 66 or even 56 and you do that, you may have suffered a financial calamity you can't recover from."

At the same time, today's economic troubles will continue to put pressure on both ends of the start-up sector, Kane said. It will be hard for deals to be done to fund new companies and for companies to have successful exit strategies as the acquisition and stock markets cool, he said.

But just because a company doesn't get funding doesn't mean the company goes away, Kane said.

"It may not become incorporated or hire all its workers, but the founders in most cases are going to struggle on," he said.

Stevens has advice for those who want to start a business, no matter their age.

"You do have to have an idea that's a winner, whether it's unique or you take somebody else's and know you can do it better," he said. Make sure you have enough money to commit to the new business for at least a year.

There are plenty of resources for those thinking about entrepreneurship.

The Small Business Administration, for example, launched its website for older entrepreneurs last week at www.sba.gov/50plusentrepreneur. The site repackages and links to information from the rest of the SBA site, including a self-assessment test for entrepreneur wannabes. There are also many links to outside resources.

The site offers encouragement and statistics that back the contention from the agency's acting administrator, Sandy K. Baruah, that entrepreneurs over 50 "will drive significant new business growth in the coming years."

Those new business owners will be part of the churn that accelerates when the economy undergoes tough times, which another Kauffman study says eventually boosts jobs and productivity.

"A recession forces a reallocation of jobs and resources, it sort of reshuffles the deck," Kane said.

"Most of it is painful and difficult, but most of that is good and necessary. When we get things sorted out again, you do find this entrepreneurship activity has a payoff."

cyndia.zwahlen@latimes.com

Celebrity ink: More than just Angelina Jolie Tattoos aren't relegated to the "Changeling" star and Tommy Lee. Photos Kitchen gadgets: worth it or not? When it comes to ingredients and tools that beckon to the enthusiastic cook, what's really worth your hard-earned cash? Discuss Save over 50% off the newsstand price. Click here to subscribe to The Times. // JavaScript Document if (navigator.userAgent.indexOf("Firefox")>-1){ aa=document.body.getElementsByTagName("h1"); if (aa.length>0){ if (aa[0].className=="orgurl" && aa[0].childNodes[0].tagName=="A") { aa[0].childNodes[0].style.color="#666"; aa[0].childNodes[0].style.textDecoration="#666"; aa[0].childNodes[0].style.cursor="default"; } } }
Email | Print | Text | RSS
Most Viewed Most E-mailed

Source

Democrats postpone crucial vote on auto bailout
Democratic leaders in Congress sidetracked legislation to bail out the auto industry Thursday and demanded the Big Three develop a plan assuring the money would make them economically viable.
Dell profit tops Street view, shares rise
Reuters - Dell Inc, the world's No. 2 PC maker, posted a better-than-expected quarterly profit on Thursday as cost cuts offset lower revenue, sending its shares up about 6 percent.
Fannie Mae, Freddie Mac halting foreclosures
WASHINGTON -- Mortgage finance companies Fannie Mae and Freddie Mac are suspending foreclosures for about 16,000 households during the holiday season.
Abbott settles finofibrate claims
Abbott Laboratories said Thursday that it has reached a settlement of pending litigation and will pay about $184 million to resolve the claims.
Dems are postponing crucial vote on auto bailout
Democratic leaders in Congress sidetracked legislation to bail out the auto industry Thursday and demanded the Big Three develop a plan assuring the money would make them economically viable. …
Dow sinks nearly 445 points after last-minute sell-off
The blue-chip index closes the day at 7,552 -- its lowest since March 2003 -- as investors endure another spate of depressing economic news and anxiety over the fate of troubled U.S. automakers. …
S&P dives to lowest level since 1997
Reuters - Stocks plunged yet again on Thursday, as a frantic flight from risk prompted by investors' deepening economic fears drove the benchmark Standard & Poor's 500 index to its lowest level since 1997…
FTSE suffers losses
AFP - London shares were in the backfoot on Thursday as recession fears deepened on new data showing a surge in US jobless claims.
Oil at 3-year lows; gas below $2 in 23 states
Benchmark crude fell as low as $48.50 a barrel on the New York Mercantile Exchange. Oil prices today hit levels…
Dell 3Q profit falls as PC spending slows
ROUND ROCK, Texas -- Dell says its third-quarter profit fell 5 percent as businesses around the world spent less on computers.
NYSE to suspend trading in Hartmarx stock Nov. 26
The New York Stock Exchange said Thursday that it is preparing to suspend trading in the shares of Hartmarx Corp., because the Chicago apparel maker's depressed market capitalization no longer meets the…
Dow sinks nearly 445 points after last-minute sell-off
The blue-chip index closes the day at 7,552 -- its lowest since March 2003 -- as investors endure another spate of depressing economic news and anxiety over the fate of troubled U.S. automakers. …
General Growth hires bankruptcy advisor Sidley Austin
Debt-laden mall giant General Growth Properties Inc. has hired the law firm Sidley Austin as bankruptcy counsel while it negotiates with lenders for more time to restructure its $27 billion debt load. …
Congress rushes to extend jobless benefits
WASHINGTON -- Jarred by new jobless alarms, Congress hurriedly approved legislation today to keep unemployment checks flowing through the December holidays and into the new year for a million or more laid-off…
Low share price threatens Midway Games with delisting from NYSE
Video game publisher Midway Games is in danger of being de-listed from the New York Stock Exchange because of its low share price, the company said Thursday.
Steve and Barry's to begin liquidating
Steve & Barry stores and its parent company have abandoned plans to keep stores open during bankruptcy protection and will liquidate them over the next few months, according to a bankruptcy court filing. …
Norway's oil fund seeks stock bargains in slump
AP - Tumbling global stock markets open up opportunities for Norway's vast oil profits fund to increase its equity holdings at bargain prices, the fund's top manager Yngve Slyngstad said Thursday.
Shares briefly edge up after losses
Reuters - Stocks briefly edged higher on Thursday after the benchmark S&P 500 index fell to its lowest level in more than six years, triggering short-covering after breaking key technical levels.
Citysearch seeks tips from Facebook friends
Everyone's a critic on the Internet.
Citi, JPMorgan, Capital One bid for Chevy Chase: sources
Reuters - Citigroup Inc , JPMorgan Chase & Co and Capital One Financial Corp are among the final bidders for Chevy Chase Bank, a Bethesda, Maryland, lender, sources familiar with the matter said.
The Bank Terrorist
Investor's Business Daily - Housing: For years, a self-described "bank terrorist" blackmailed banks into making bad home loans in our inner cities. Now those loans are defaulting by the millions, and he's…
JPMorgan cuts investment banking jobs: sources
Reuters - JPMorgan Chase & Co is cutting about 10 percent of its investment banking staff as the credit crunch and slowdown in the economy bite into bank earnings, people familiar with the situation said…
Chinese carmakers also seek government aid
Caught in a slowdown, they urge policy changes rather than bailouts. Some are deferring export plans and cutting their costs. …
Mortgage lifeline for borrowers
You may have seen headlines about the latest public and private efforts to help financially distressed homeowners cope with their mortgage payments. But you might not have caught key details that could…