Starting a business is difficult at any age. Baby boomer entrepreneurs planning to retire soon need to be particularly careful that they don't gamble and lose their life savings. "You have more capital to invest, and at the same time, you have more to lose," cautions Dan Olszewski, director of the Weinert Center for Entrepreneurship at the business school at the University of Wisconsin-Madison. But baby boomer's accumulated knowledge and experience also put them in a better position than most to succeed. "Many of the most successful businesses are when the entrepreneur knows something about the industry and they are able to leverage that knowledge in some way and come up with a better solution," Olszewski says.
Here are some tips to help baby boomer start-ups boom:
Tap your network. A lifetime's worth of accumulated friends and acquaintances are essential to get a business off the ground. "We have this archetype of the lone genius, but that's not really how it works. It's more often a team effort," says Dane Stangler, a senior analyst at the Kauffman Foundation, a group that promotes entrepreneurship. "No one could build a company today in the absence of a network, and you can see how someone in their 50s is going to have a much deeper network to tap into to build their company." Many cities have business incubators, which provide start-up companies with affordable office and lab space and valuable mentorship and networking services. Local colleges also are a valuable resource for ideas and troubleshooting.
Use your experience. Many baby boomers have accumulated expertise in an industry that gives their business a head start. "You know a lot more and have an understanding of what your customers need because you may have been in that industry," says Olszewski. "You probably have a much larger Rolodex of connections that help you pull together different resources, such as funding and finding customers." Lyn Berg of Fayetteville, N.C., served in the military for 28 years and now runs a business designing quickly erectable 150-foot mobile communications towers, Mobile Tower Technologies. "My experience in the military and my experience in undesirable situations was a great help" Berg, 71 says.
Find start-up funds. One of the greatest barriers to starting a business is coming up with the start-up capital. Dan McDonald, 57, a retired electrical engineer from Knoxville, Tenn., and his business partner, Ron Michaels, won a grant from the U.S. Department of Energy to develop their plant X-ray system and start their company, Phenotype Screening Corp., in 2004. But even that did not solve their money worries. "We were very fortunate to have won a grant from the Department of Energy for $50,000, but my partner and I couldn't take a salary on that kind of money," says McDonald. "We mortgaged our homes, and you are always hustling and watching over your business." Some cities offer tax breaks to entrepreneurs and small-business investors. For example, North Dakota's Seed Capital Investment Credit gives investors in start-up companies a significant tax break, and new entrepreneurs in the state also get special tax deductions. And in Maryland, the state-funded Maryland Venture Fund provides financing for start-up technology and life science companies. To find out about tax perks in your state, contact your state's department of revenue.
Plan for longer hours. Just because you don't have a boss, don't assume you'll get to take long lunches and go home early. "Usually when you start your own business, you are on a shoestring and you don't have a lot of other people around to do the work for you," says John Challenger, CEO of Chicago-based outplacement firm Challenger, Gray & Christmas. "One issue for people in their 50s is: Do you want work to dominate your life?" Linda Remeschatis, 60, a former prosecutor in Madison, Wis., who started an online food and gift store, Wisconsinmade.com, now makes less money and works more hours than she did as an attorney, but she says enjoys her second career more.