Written by James Jordan, Chairman of IoD Devon and Cornwall
If asked to describe an entrepreneur, you are most likely to think of a 20-something tech start-up founder. At the very least, it certainly would not be someone close to or in retirement age. But today, more and more over-50s starting their own businesses is one of the most significant trends in the British economy. A paper published by the Future Laboratory in 2014 stated that 1.7 million people running their own business in the UK were aged over 50. Perhaps most significantly, the report also said that 70 per cent of start-ups led by the over-50s will stay in business for at least five years, compared to a survival rate of 28 per cent for younger entrepreneurs.
Why is this demographic redefining how we think about work in the 21st century? The over-50s have amassed not just significant business experience but gained a wide range of hard and soft skills to build lasting relationships and manage people successfully. They are also likely to have few long term commitments so can be more adventurous in their risk taking, and have the contacts to match. Companies started by the over-50s might also be expected to hire more older workers – a key benefit as the UK population ages.
As Professor Mark Hart of Aston University, a government adviser who leads the Goldman Sachs 10,000 Small Businesses programme, says: “The shake-up from the recession has provided the impetus for people who are over 50 to say that it’s time to do something that they’ve always wanted to do, and to take an opportunistic approach to creating their own business."
“These are not people who are past retirement, but individuals with years of productive activity in front of them, and their move into the ranks of entrepreneurs opens an interesting new aspect within the UK’s business culture, both socially and economically.”
For those facing the prospect of retirement or leaving lifelong employment, starting a business can be a great way to continue engagement with work. Starting a business is not the only option or even everyone’s first choice for retirement but it can keep an individual busy, stimulated and in some cases physically and socially active. For some it may be a decision out of necessity, to supplement their income as the official retirement age rises, while for others it may just be a way of staying active.
The environment for older entrepreneurs has never been better. The UK is ranked by the Organisation for Economic Co-operation and Development as one of the top ten developed countries where it is easiest to start a business. Combined with recent reforms that allow people to unlock their pensions, the ambition to start a venture later in life is open to greater and greater numbers. In September, the IOD will launch its report The Age of the Older Entrepreneur, authored by members of the Policy Team. The event will include a panel to debate what the future of work for older people looks like and what business and government can do to facilitate any changes. Age should not be an obstacle to starting a business but, like young people, those starting a business at a later point in life face challenges, albeit different ones. Most of the recent focus from the Government and related organisations has been on encouraging younger people to found new enterprises, but more should be done to encourage different ways of working later in life.
James Jordan, Chairman of the South West Institute of Directors Devon and Cornwall branch and HSBC South West head of corporate banking