Starting a business after the age of 50 is obviously a lot like starting a business at any age. All companies pretty much have the same rules for achieving success -- find a new idea; treat customers well; deliver value; outpace the competition.
Still, there are some subtle nuances about starting any business a little later in life. Sure, you may be approaching retirement, with a lot more free time and a nice nest egg to tap, but bouncing back from a failed business at 25 can also be a lot easier than when you're 65.
Are you over 50 and thinking about branching out on your own as an entrepreneur? Here are five things you need to know.
1. Don't see your age as a deterrent.
It can be easy to think about starting a business the way people over 50 used to think about going back to college to get that degree they always wanted. As long as you don't want to retire in a couple years, starting a company later in life shouldn't be a big deal. If you want a little historical inspiration, look at Ray Kroc, who was 52 when he went into business with Richard James "Dick" McDonald and Maurice James "Mac" McDonald and started the McDonald's empire. Harland Sanders, founder of KFC (Kentucky Fried Chicken) started franchising his business when he was 65. And Momofuku Ando, the inventor of ramen noodles, started his company selling precooked instant noodles at age 48.
2. Think long and hard about what this venture is going to cost.
This is obvious advice, but it needs to be said: Don't invest more than you can afford to lose.
"Try to use other people's money," advises Gene Zaino, CEO of MBO Partners, a website that offers administrative services to independent consultants and small firms. "You're at a point in your life where you need to be protective of what you have, and as much as possible, avoid tapping into your 401(k) or retirement, or even your home line of credit."
But it's a delicate dance. The wonderful and terrible thing for many boomer entrepreneurs is that at this stage, you may well be sitting on a large nest egg. That's wonderful because those funds could be invested into a business that generates new income for you. But that's also terrible because you may be tempted to sink all that money you've saved into starting a business.
3. Remember, experience matters.
Yes, young entrepreneurs may get much of the attention today, but the more you've been around, the more contacts and knowledge you have to draw upon. "You have a real asset you can leverage -- your experience," Zaino says. "That's a value you could quickly get some return on and that you don't need to do a lot of marketing and spend a lot of money on."
On the other side of the coin, Patrick Sweeney, president of Caliper Corporations, a global consulting firm that helps companies hire and develop top performers, points out, "By 50, most people know their strengths and limitations, so be honest with yourself and play to your strengths." If there are certain giant holes in your knowledge or experience that you're going to need in running your company, Sweeney advises, "don't try to go it alone. Ideally, seek out someone else with a similar passion for the business who will support you."
4. Consider buying a business.
You don't have to start from scratch to be an entrepreneur. The good news about having a bigger savings account than a 25-year-old is you may be able to buy an existing business. While all the advice about being careful about tapping into a 401(k) or retirement is still absolutely relevant, becoming a franchisee or purchasing an existing business may be the way to go. Just remember the obvious: If you know nothing about a particular industry, buying a business within that industry and assuming it'll run the way it always has could be a serious mistake. The beauty of franchising, of course, is that franchise companies teach the franchise owner how the business is run, and ideally they have a proven system of success. (You can find franchises for sale on numerous sites, such as FranchiseDirect.com, FranchiseGator.com and FranchiseSelectionSpecialists.com). That said, franchisees fail all the time. One useful franchise website to check out is UnhappyFranchisee.com. Subway, for instance, is an extremely popular franchise, whereas Quiznos is often getting beat up in the news for its franchisee and debt problems. So, keep in mind that just because a business is a franchise doesn't mean it's automatically a good deal.
5. Don't chase the money.
When you're in your 50s or older, you may think it's nice to slow down and not work until midnight -- and that's fine. But remember, getting any business off the ground takes a lot of manhours. (The Small Business Administration offers this self-assessment tool for people over 50 who are thinking of starting a business). That's why it's crucial, Sweeney says, that you love the idea of running your own business. Your main goal, according to Sweeney, should not be money, believe it or not. "If that's your prime motivator, you should consider other options, such as the lottery. One of the most important lessons for anyone who is successful is that you have to love your work. The money may follow. But if you're looking for real fulfillment, you have to love what you're doing."
And he's right. If you make money in your business, it probably won't come immediately. It may not come at all. And what may be worse than being stuck in a dead-end job in your 50s and 60s is owning a dead-end company in your 50s and 60s. That's why Sweeney says it's important for any baby boomer who wants to start a business to feel a "sense of urgency" about it, a sense that "you will not be complete unless you start this venture. Every waking and sleeping moment should be consumed with your new vision." He says that every day you should wake up and want to get started on your business and, at the end of the day, have that feeling: I'm being paid to do this?