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Tuesday, May 25, 2010

More Older Americans Start Own Businesses

USA Today

YOSEMITE, Calif. — After toiling for three decades in finance, it wouldn't be surprising if 65-year-old Patrick Althizer kicked back and lived off his savings and Social Security.

But with a spirit not ready for sedentary retirement — as well as college costs for two daughters — he veered off to a new career path: leading shutterbugs through the stunning waterfall areas of Yosemite National Park.

Althizer has embraced his new vocation with enthusiasm. He plastered decals that promote his firm, Photo Safari Yosemite, on the windows of his white Jeep Cherokee, networked with the folks who run local tourist attractions, and at his daughters' behest, joined Facebook to promote his firm, which takes tourists to the best photo-taking spots in the national park.

"I was a Navy photographer when I was younger — when I was in my twenties — (then) I got diverted into a finance career for about 30 years," he says. "When I was 64, I got out of the finance business and tried to figure out what I wanted to do when I grew up."

His answer: start his own business by pairing two of his passions — photography and exploring.

He joins millions of other Americans in ramping up a business at an age when many slow down. Folks 55 to 64 represented the second-largest jump in entrepreneurial activity by age (just behind 35- to 44-year-olds) from 2008 to 2009, according to an Index of Entrepreneurial Activity released last week by entrepreneur-focused group Ewing Marion Kauffman Foundation.

Other studies, such as a recent Global Entrepreneurship Monitor report, as well as data from the Bureau of Labor Statistics (BLS), also show an uptick in older folks becoming their own bosses.

The number of self-employed Americans rose to 8.9 million in December 2009, up from 8.7 million a year earlier, according to BLS data provided by outplacement firm Challenger Gray & Christmas. Self-employment among those 55 to 64 hit nearly 2 million, a 5% rise from the prior year. Self-employment for those 65 and older hit 939,000 — a 29% increase.

The rise has been fueled by factors such as the tidal wave of Baby Boomers who don't want to stop working, economic necessity triggered by the recession, and the rise in longevity, says Dane Stangler, a research manager at Kauffman.

"Americans are not only living longer but also living healthier longer, suggesting that those entrepreneurial 60-year-olds could be 2020's entrepreneurial 70-year-olds," he says.

Economic impetus

Slightly more than 2 million people 55 and older were looking for jobs in April — 52,000 more than in March, according to BLS data provided by the AARP Public Policy Institute. The unemployment rate for that age group, 7%, is lower than the 9.9% national average, but the demographic is often out of work for longer periods. (The duration of unemployment for older jobseekers rose from 38.4 weeks in March to 42.9 weeks in April.)

Nearly six in 10 older unemployed workers had been out of work for 27 or more weeks in April. At the start of the recession in December 2007, 23% of this group were out of work for that length of time.

A third of workers age 55 and older who were laid off in the past 12 months and did not find a job said they were considering starting their own business, according to a CareerBuilder.com survey taken in February and March. (CareerBuilder is jointly owned by Tribune, McClatchy, Microsoft and USA TODAY parent Gannett.)

Bryan Goodman, 53, decided to focus full time on his big-and-tall-man's clothing business after he lost his job as a manager at a Boston car dealership.

"For many years, I had been selling things causally on eBay, but when I got laid off and couldn't get another job, I decided that ... I could do this as a business," he says.

Economics also were a factor for 69-year-old Alan Friedman, to think big — very big — about his entrepreneurial route.

For decades, Friedman sold high-end antiques, but with the downturn, and some of his clients' tastes changing to more contemporary furniture, he decided to start a new venture called Transitions in Design in West Palm Beach, Fla.

"It's very difficult in the economy today, especially dealing in high-priced merchandise," he says. "In the last few years, I lost a good portion of my customer base."

He began to replicate iron furniture from the 1950s, which he was able to sell at more affordable prices. He also tapped into his own creativity and began to design large-scale bronze sculptures for individuals as well as municipalities.

Business hasn't been brisk, but Friedman says he's going to keep at it. "I need to make a living."

Non-economic factors play roles, too

Businesses born from older folks come about for many reasons. Sometimes, it's as simple as a major birthday lighting the entrepreneurial spark. Other times, it's serial entrepreneurs who can't squelch the urge to keep creating new firms.

"These milestones do hit people squarely over the head — it's the workforce equivalent of a midlife crisis," says Robert Litan, Kauffman vice president for research and policy. "They force you to ask the question 'What am I going to do for the rest of my life?' "

The idea of starting a new business can also come after a chance meeting with someone who has an interesting job or pastime.

A customer who bought a slew of dock lines from boating store West Marine inadvertently steered Thomas and Connie Betts toward a new profession. Thomas, an operations manager for the retailer, asked about the large purchase — and the customer said he was using the rope for his alpaca ranch.

"I said, 'What's an alpaca?' " recounts Brett.

But the more he learned about the mild-mannered animal, and the value of its soft fleece, the more interested he became.

He and Connie, ages 55 and 56 respectively, researched the animals and took classes on raising alpacas. They moved to the Hood River, Ore., area, where they had yearned to live, and started Cascade Alpacas of Oregon.

"It's been a lot of fun," says Connie. "We love our alpacas."

Not always smooth sailing

The Bettses are enjoying their business — and making a profit — but it took extensive effort to get to that point. Tom and Connie continued to work at different jobs so they had funding as they got the ranch going, and Connie still holds down a separate full-time job so they have extra money coming in.

"It sounds really simple to say 'I'm going to start my own business,' " says Deborah Russell, AARP director of workforce issues. "But it's a huge undertaking, and it needs to be taken seriously."

Russell says that making a vocation change at midlife comes with decision-making stress such as how to fund a venture without risking a retirement nest egg.

Entrepreneurs in their twenties and thirties have decades to make up lost money if a firm fails. But older owners simply have less time.

The Bettses said they mapped out several "worst-case scenario" situations when they decided to go ahead with the alpaca ranch. "With alpacas, it's not a get-rich-quick scheme. It can take years" to make a profit, says Connie. "We said, 'What's the worst that can happen, and can we live with that?' "

EBay seller Goodman says the financing issue has also been top of mind. He's dramatically cut back on living expenses to fund his venture, but is now thinking "Do I use my retirement money?"

The hurdles for older workers also go beyond the potential of losing retirement savings.

"Facility with technology is a big barrier for a lot of older people," says Kauffman's Litan.

Another obstacle for most older people is that they just don't have the stamina that they once had, Litan says. "It's true," says the 60-year-old. "I know it myself."

Some advantages exist

Yet, for all the pitfalls, signs indicate this is a good time for a more mature person to become a business owner.

Those seeking counseling can now choose from numerous online resources that target older entrepreneurs, such as the Small Business Administration's "50+" page (sba.gov/50plusentrepreneur) and the "Start Your Own Business" section of RetiredBrains.com, a site started by 75-year-old Arthur Koff when he was 68.

A plethora of information exists that small-business owners can glean from their peers — often by logging onto social-networking sites.

Many older entrepreneurs also have the advantage of having non-technology-related networks that were built up through years of face-to-face interactions, says Litan.

"Older people have a deeper social network than kids that just have 400 friends (online)," he says. "They have a real, live Facebook — these are people they can count on."

In addition, maturity comes with another big advantage: experience.

Nearly all the company founders surveyed in a Kauffman study released last fall said prior work experience was an important success factor.

Patty Tobin, 56, says her work in the asbestos removal field, as well as her time as a marketing consultant, greatly helped her in her jewelry venture.

"I know how to deal with banks, how to read a lease, how to hire people and how to manage people," she says.

She also says that a positive attitude — and a willingness to keep learning — have also been large factors in her entrepreneurial success.

Tobin says she "has no formal training in design or fashion," but once the environmental contracting firm she co-owned closed a few years ago, she began to experiment with jewelry design.

She first sold her wares to a boutique in her local Albany, N.Y., area, and has slowly expanded her business. Last fall, she opened a boutique in Manhattan, and a few weeks ago, she introduced her merchandise to buyers in Canada.

"You can teach an old dog new tricks if they're willing to learn, and I am," she says.
Self-employment by age