Seniors Start Businesses
According to the US Department of Labor, the number of new businesses started by individuals over fifty years old is larger than the number of new businesses started by younger workers. This makes sense for a variety of reason. Individuals in their late working years tend to have more assets and greater savings, so they possess the capital needed to invest in a business, establish a line of credit for the business, and endure an almost certain period without revenue. They also have experiences that help guide them as to what products and/or services can turn a profit while their experiences afford them the benefit of having relationships with a potential customer base. Trust, professional recognition, and brand recognition are three invaluable commodities in short supply that cannot be bought. They must be earned over time. Older workers enjoy these real benefits; whereas, the youth tend to lack these resources.
Perhaps more importantly, older workers looking to start a business have the confidence that comes with a history of financial and professional success. Starting a business due to job loss has become far more common, especially in the wake of the Great Recession. Older workers, who know they have the ability to make money with their skills and experience, have an easier time seeing a clear path to prosperity. A young worker, however, may not be able to see a way forward, especially if an individual has made multiple attempts to find a means of generating revenue after being rejected by employers. Given the Great Recession, this scenario may well be more commonplace than some would like to admit while exasperating factors, such as mental illness or inherited poverty, can leave individuals unable to effectively compete in the economy.
Although these factors are largely perceived costs, which motivation might overcome, it is foolish to think a person can have their legs broken then be expected to win the marathon that our economy has become. Capitalism is predicated on the idea that effort, which is beneficial to others and/or society as a whole, is rewarded financially via an increase in standard of living, greater financial security, and financial freedom. Young entrepreneurs will tend to quickly exhaust their capital, especially if they cannot temporarily displace costs necessary for their success onto others, such as their parents, and their ability to adjust to failures by finding new directions.
In many respects, the idea of older workers leading the charge in business creation is nothing new. In Meadville, PA, which had long been considered the tool and die capital of the world, well-paid blue collar workers would establish themselves in a shop, develop some idea, which they conceived while working, then spin off new companies to service the needs of their employers and other surrounding businesses. Today, this cycle of innovation has been short-circuited by a need for greater startup capital thanks to inflation and the focus on capital-intensive, high tech industry, a mismatch of technical and intellectual capital with those who can start a business venture, and a tendency of businesses to incur opportunity costs over training/productivity costs.
Opportunity costs are incurred when businesses do not utilize the skills, knowledge, and intellectual capital of employees to pursue new opportunities. In order to control costs, employers seek ready-to-go workers with specialty backgrounds, where the cost of specialized (re)training is continually subsidized by the government or absorbed by the workers, instead of hiring workers with broad-based training such as those educated in the sciences. Locking the right people out of an industry in order to save on training costs, appease labor unions, and/or suppress wages by embracing lower skilled labor is a killer to innovation and industry, especially in a globalized, lowest bidder economy. It is also harmful to high quality employees who cannot get their foot in the door. In short, older workers need to be the source of business creation while high quality younger workers need to be positioned for future business creation.