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Launching a Business at Mid-Life

Yearning to be your own boss? Here’s what to think about first

an older small business owner in her boutique

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It's not too late. Midlife can be a great time to start your own business.

After 34 years in the technology division of a mid-sized insurance firm, Alan Baker was ready for something new. He had a solid nest egg, no mortgage, a wife who works and a last child in college.  Baker figured he was at a good point in life to start a business.

In February he launched Spitfire Innovations, a technology consultancy in Toronto. Baker viewed starting at 56, rather than 25 or 30, as less of a risk. “It’s not like I have expenses and obligations coming out of my ears,” he says. “There are a different set of pressures if you’re worried about paying the mortgage. I think being in midlife is a real benefit if you’ve planned ahead financially.” He also has a well-established network of professional peers, who became a great source of support and leads. And although Baker has a set amount he wants to earn annually, he’s got enough saved that he can choose his clients carefully.

Satisfaction, High. Timeline, Short

Although the timeline shortens if you start a business after 50, there is plenty of interest in giving it a go. People between 50 and 67 see working independently as insulating them from the vagaries of corporate life — 17% became entrepreneurs because of a job loss and another 17% left a job because they were unhappy, according to MBO Partners’ “The State of Independence in America” report, published in September. Among those who work independently, 85% say they are highly satisfied doing so. Those who continue beyond age 67 are the most satisfied of all with working independently.

Patricia G. Greene, a professor of entrepreneurial studies at Babson College in Boston and national academic director of Goldman Sachs 10,000 Small Businesses program, says there are several advantages to starting a business at midlife. “The biggest is that you’ve got networks,” she says, echoing Baker. Greene, who is 59, is also an entrepreneur. She and two cousins recently bought Artworks, a specialty home goods retailer. “Anything we need to know, one of us knows somebody who can help us,” says Greene. “The other thing is we know ourselves better, we know the kind of work we’re interested in and the kinds of things we don’t want to do.”

Know Your End Game When You Begin

But starting a business in midlife also means fewer years to build it, so the strategy has to be carefully considered. Greene and her business partners planned out the trajectory of their venture, deciding how many years they wanted to build and grow it before selling. “I think any middle-aged entrepreneur should know the end game,” she says. “They should be trying to create some value and have a plan to get that value back out of it at some point.”

Like other midlife entrepreneurs, Baker has advantages younger entrepreneurs don’t — decades of professional experience, fewer demands on his time and more financial flexibility. But Baker also has a much shorter time horizon for growing his business and driving up revenue. Consequently, he faces issues someone younger doesn’t. Midlifers like Baker need to carefully consider the financial risks — especially in light of retirement needs — and the timing of their exit from the businesses they build.

Minimize Capital Costs and Debt

Midlife entrepreneurs also have to evaluate risk differently than their counterparts two or three decades younger. Alan Baker, for instance, knew he didn’t want to start a business with significant startup costs. “Being older is a disadvantage in that case because of the time required to recover an initial large investment. So anything with large capital costs is a big risk,” he says.

That’s how Chris Meyer, owner of Expedia CruiseShipCenters in Laguna Hills, Calif., felt. He spent 30 years in the newspaper industry, ultimately as deputy editor of local and business news at the Orange County Register, supervising 80 people. The paper had been going through a series of layoffs when Meyer, who loves to travel, saw an ad on LinkedIn for Expedia CruiseShipCenters travel agencies. “I researched the travel industry and found it was in the midst of huge disruption, just like newspapers. A lot of the marginal players, the mom-and-pop shops, had gone away. The consolidators were growing, and Expedia is one of the biggest names in travel.”

Meyer decided to become a CruiseShipCenters franchisee in June 2011, when he was 54, using the money from his voluntary buyout package—a generous sum after 30 years of service — to buy the franchise. “I didn’t want to go into debt at my age,” he says. “My youngest child was graduating from college, so I knew I could also cut back on expenses.”

Alex and Elizabeth Papalexis were also concerned about racking up debt when they started their business, Marks 4 Antiques, 10 years ago. Their first-year investment was $50,000. Both in their late 40s, they carefully considered their time horizon and how to scale the business without being overwhelmed by financial demands. “Because of our ages it seemed unwise to find financing through ordinary means, like a loan or mortgaging our home,” said Alex Papalexis. “We felt it would be too late for that since there is usually no time to recover if things don’t work out.”

The business, which lets users appraise and identify antiques and collectibles online, has more than 10,000 subscribers. And because Papalexis and his wife love to travel, he says wanted to start a business that could be operated from anywhere in the world.  “The internet is all we need most days,” he says.