Baby boomers are people born between 1946 and 1964, and are currently the second largest population (41 percent) owning small businesses or franchises next to Gen X (44 percent). Furthermore, a survey of 2,600 small business owners and entrepreneurs, from the 2020 Small Business Trends for Baby Boomers, revealed their desire to become more financially successful by leveraging their experience and professional network.
These statistics show boomers are far from retiring and this article aims to shed more light on their success in the corporate world.
Baby Boomers make One-Third of Business Owners
Despite being eligible for retirement, baby boomers prefer being competitive in the business, with more than half of America's small business owners being over age 50. According to the survey, one-third of these entrepreneurs are 50 to 59 years old, 17% are 60 to 69 years old, and 4% are 70 or older. Also, one-fourth of boomer businesspeople are female, while Three-fourths are males.
The industries dominated by these resilient baby boomers include:
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General retail
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Fitness and health
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Food and hospitality
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Automotive
*Note: Baby boomers aged 50 and above have dominated businesses in prosperous locations including New York, Texas, North Carolina, California, and Florida.
Business Success and Satisfaction
Business success is a crucial area to explore when discussing an entrepreneurial group, especially since failure rate studies reveal that 18.4% of private sector businesses in the U.S. fail within the first year. After five years, 49.7% go down, while after 10 years, 65.5% of businesses have failed.
Fortunately, baby boomers have managed to persevere as more than two-thirds of these business owners say their businesses are successful. The survey showed that 78% of these businesses meet the owner's satisfaction, with their happiness level being and above on a scale of 0-10.
Business Motivation and Challenges
"Why would someone of retirement age start a business?" is a common question whenever enterprising boomers are considered. Unlike during the Covid-19 pandemic when almost everyone was terminated or couldn't find jobs, the reason is wholesome and empowering.
The study revealed that these enterprising baby boomers open a business for the following reasons:
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Pursue their passion (42%)
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Capitalized on an opportunity that presented itself (36%)
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Dissatisfaction with corporate America (22%)
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Terminated from a previous job (15%)
However, while these businesses have been successful, they weren't without significant hurdles. According to 68% of these baby boomers, the biggest problem they faced with erecting an establishment is a lack of capital/cash flow. On the other hand, three in 10 cited advertising and marketing to be the biggest problem they faced, while 25% handling administration was the most problematic part.
Business Wishes and Growth plans
While these businesses are prosperous, many of them contain a sizable number of staff; 44% of entrepreneurs aged 50 and above in the survey have two to five employees. On the other hand, 32% manage the business independently, and 12% have six to 10 employees. Ultimately, they are relatively small and easy to manage; however, many boomers are looking to grow their establishment. 64% of the surveyed individuals plan to upscale their company, while 6% plan to reach a point and then sell.
Irrespective of each entrepreneur's goal for starting and maintaining a small business, they desire expansion. According to the survey, 45% of these business people will spend any additional capital on advertising and marketing. Furthermore, 44% will opt for new and better equipment, 28% prefer to hire new staff for easier administration, and 23% would invest in technology.
Means of Business Ownership
The survey reveals that 86% of baby boomers became entrepreneurs by starting or buying independent businesses, while 14% bought franchises. Furthermore, achieving this feat isn't easy, and boomers used creative options to finance these ventures. More than half of these entrepreneurs say they financed their startups with personal cash, but on the other hand, over 25% used their 401(k) plans as a source of capital. Others also turned to family and friends, unsecured loans, lines of credit, and other financing methods.
Using 401(K) as a source of capital is a method most boomers employ since people in that age group are more likely to have significant savings in their retirement accounts. It makes sense to use that creative method of financial
Conclusion
Despite their age, baby boomers want more industry success and are pushing to make it happen. Naturally, starting a business at the age of 50 and above presents its challenge, but being within that age group presents boomers with some competitive edge. Boomers have more time, experience, and financial resources to fuel their business ventures compared to younger people. Therefore, it's no surprise that they are currently the second largest population (41 percent) owning small businesses or franchises.
Topics: business