Businesses Compete for Boomer Bucks

Source: AARP Bulletin Today | June 10, 2004

Jamie Sharples wanted to find a nice place for his grandfather's 90th birthday party. Sharples, who uses a wheelchair, called seven restaurants around Philadelphia until one assured him it was accessible to disabled diners. But when the party showed up, Sharples, 30, and his grandfather were dismayed to see that the front door was up a flight of stairs. "The maitre d' said it was no problem, they would carry us up," Sharples says. To make matters worse, the bathroom was down another flight of stairs. The celebration moved elsewhere.

Most wheelchair-bound adults can tell a similar story. But Sharples, who graduated from the Wharton School of Business last year, decided to take action. He started Level Travel, an objective ranking of disabled accessibility for hotels and restaurants. Starting this fall, his website will offer subscribers ratings for 15 major metropolitan areas. The goal, Sharples says, is to become "the Zagat guide for accessibility."

He just might get there: About 20 million American adults have a disability that limits their mobility, and another 9 million are sight- or hearing-impaired. The numbers are skewed toward older people, among whom spending power is more and more concentrated.

Entrepreneurs are waking up to the business potential of an aging America. This year 78 million baby boomers are between the ages of 40 and 58. Boomers create huge shifts in consumer demand whenever they reach a new stage of life. The combination of wealth and numbers "gives entrepreneurs a giant opportunity, if they act fast," says media executive Myrna Blyth, formerly the editor of Ladies' Home Journal and More. Now boomers are shopping for furnishings, vacations, specialized health care and whatever else will enhance their lives in the years after child rearing and careers. Although the commercial possibilities are staggering, the business world has been slow to respond.

The opportunities are concentrated on two markets. The first is married couples in their 50s and 60s who still spend freely. Households headed by a person age 55 to 64 spend 52 percent more than the national average on hotel and motel rooms, according to the Bureau of Labor Statistics' Consumer Expenditure Survey. That's not all. They spend 48 percent more on gifts and 34 percent more on women's clothing, to name two examples.

The second opportunity is health care. Householders age 55 to 64 spend more than $3,000 a year, 28 percent more than the national average. That figure rises to 58 percent above average for householders age 65 and older. In the next decade, the number of Americans ages 55 to 64 will increase 33 percent to 40 million, while the number ages 65 to 69 will increase 54 percent to almost 16 million.

In April, Level Travel and 79 other eager start-ups vying for boomer dollars competed for a $10,000 prize at the American Society on Aging's annual meeting. Six finalists presented their business plans to judges who included venture capitalists and the retired CEO of Bank of America. The crowd smiled and chuckled as the finalists, most of whom were in their 20s, did their best to impress the judges, most of whom were over 50.

The competition, the Boomer Business Plan Challenge, is the brainchild of Mary Furlong, who founded the websites SeniorNet and ThirdAge before starting her own business-consulting firm in Lafayette, Calif., last year. "There's real joy in creating a business for older adults, because the businesses solve real problems and the customers are grateful for the solution," she says. "The entrepreneurs you see here are passionate. They care about their customers, and at the same time they see a mega-opportunity."

Many of the business plans submitted originated in top U.S. business schools, and in others from as far away as Great Britain and the Netherlands. The 20 semifinal entries ran the gamut from goofy to touching to exciting. In the first category was the MobileFit Group's pitch—an 8-ounce device worn around the wrist that supposedly encourages exercisers with a recorded voice that barks out imperious orders, like "Keep going!" and "I don't see any sweat on that body!" It's true that we need exercise—more than one-quarter of people in their 50s and 60s are obese, according to the U.S. Centers for Disease Control and Prevention—but really, who wants a canned coach on their wrist?

Like Jamie Sharples, many of the contestants say they were moved to start their businesses by personal experience. Beth Sanders started LifeBio four years ago, after a visit with her grandmother turned into a profound conversation about the older woman's life. Sanders built a website that prompts visitors to supply information and images about significant events and memories from someone's life. Then the site packages the material and offers it to the memoirist as a hardcover book or a more affordable electronic document that can be downloaded. Sanders says that her target customer is a boomer who's spending time with an elderly parent or relative, and—not surprisingly—older adults spend 30 percent more than average on reading material.

The winner of the Boomer Business Plan Challenge was MicroMRI, which sells a device that could dramatically improve the treatment of osteoporosis. About 44 million Americans over the age of 50 have low bone density, according to the National Osteoporosis Foundation, and one in two women over age 50 will have an osteoporosis-related fracture during her lifetime. The company holds six patents on a device and software that can be added to magnetic resonance imaging machines so doctors can measure a bone's strength without ordering an expensive biopsy. The device can speed clinical trials of new drugs and reduce the overprescription of existing drugs.

"We're part of a new trend toward health care companies that offer individualized medicine that caters primarily to patients, not doctors," says MicroMRI CEO Onne Ganel, another Wharton graduate who holds the license on technology they developed at the University of Pennsylvania.

The Boomer Business Plan Challenge will become an annual event, says Mary Furlong, who also plans to offer more assistance to entrepreneurs. "Boomers and seniors want to invest in great companies that give back," she says. "It's exciting to bring this message of social responsibility to young entrepreneurs."