More boomers choose to start over with startups
Entrepreneurs cautioned to manage expectations
At 52, corporate veteran Bob McEwen and his wife sold their home and moved into a friend's basement so they could cover payroll for their young commercial sign company.
"It's very humbling," McEwen said.
A year earlier, McEwen had lost his six-figure salary after being laid off, ending a 22-year career that included working with missile systems and mortgage products.
During his frustrating and unsuccessful job search, McEwen attended a franchise expo and decided to invest in a Signworld business. He opened SignCraft Solutions in Wake Forest, N.C., in August 2009.
"It just felt right," said McEwen, now 54.
McEwen is among a growing number of baby boomers — people born between the years 1946 to 1964 — who are turning to small business opportunities as a way to build a new career, supplement retirement or give them a way to spend their time.
Research conducted by the Ewing Marion Kauffman Foundation indicates that the percentage of firms created by Americans ages 55 to 64 grew more than any other age demographic, up 6.6 percent to 20.9 percent in 2011 compared to 14.3 percent in 1996. Firms created by entrepreneurs ages 45 to 54 rose 3.8 percent in that span.
The trend is somewhat predictable, considering the number of baby boomers reaching retirement age mixed with an economy that has limped through the past six years, said Michele Markey, vice president of Kauffman FastTrac, an arm of the Kauffman Foundation that provides training and resources to prospective and current entrepreneurs.
Some boomers are turning to franchising, while others use existing skills to start a business from scratch. Regardless of the motivation, Markey said, starting a business requires consideration and planning, especially for boomers.
"Their (business) on-ramp and off-ramp are much closer together," Markey said. "The biggest mistake is not spending adequate time planning."
New boomer entrepreneurs need to understand how much money they are willing to invest, how long it will take to reap financial benefits and when they'll be able to exit the business, she said.
They also need to be realistic about the level of commitment a new business will take, surround themselves with resources and mentors, and build a network of support, Markey said. Solid financial advice is also critical, she said.
McEwen said he saw his January 2009 layoff coming, but it was still scary. His four kids were grown and out of the house, but he needed an income for bills and retirement.
After a six-month job search, McEwen decided to invest in Signworld, a company that helps entrepreneurs set up businesses that manufacture and distribute commercial signs. McEwen cashed out his retirement and paid $175,000 for equipment.
The company offers training and other support, McEwen doesn't have to pay royalty fees and it has more flexibility than an actual franchise, he said.
The first year, McEwen said, was hard, even with his wife's income from her occupational therapist assistant job.
"There were days we didn't know how we were going to cover payroll," McEwen said. "We ended up going more and more in debt."
McEwen worked 65-hour weeks, and didn't earn a paycheck for two years. His debt topped out at $80,000 in 2011, but he has since been able to pay off $30,000 as business has increased, he said. Finances have become stable, and the business has continued to expand, so much so that McEwen's wife was able to quit her job and start working full time for the company in 2011. "Within the next couple of years, we expect our business to be grossing a million dollars or more," McEwen said.
Recently, a friend reached out to McEwen and said there was an open position at a regional bank.
"I had to think about that for a second," McEwen said. "I felt like, 'No, I don't want to do that.' I am committed to this. This is my lifestyle. This is where I want to be."
- 10 things to know about corporate inversions
- 10 jobs you can get right now
- Summit County sees credit card breach after...
- 6 financial moves to prevent sleepless nights
- 3 ways insurers can still avoid covering the...
- Amish country bristles at ‘Mafia’...
- Is it possible to be both happy and sad at...
- Paul Mero steps down as head of Sutherland...
- 10 things to know about corporate... 29
- 3 ways insurers can still avoid... 13
- Amish country bristles at... 10
- Mimicking the airlines, hotels get... 9
- Paul Mero steps down as head of... 9
- Burger King in talks to buy Tim Hortons 8
- California push to avert higher gas... 3
- Cantwell targets small business loan... 3