Accidental or greying entrepreneurship: Don’t jump in too fast
Lots of out-of-work folks are starting their own businesses. And many of them are not spring chickens. But, it’s still not clear whether these businesses have staying power. Or these people are cut out for entrepreneurship.
First, about the general trend for laid-off workers to launch a business, a phenomenon termed “accidental entrepreneurship”. There have been a number of studies showing it’s on the rise. Most recently, a survey of 900 workers by CareerBuilder.com found that 32% of those who were laid off in the last six months and have not found jobs are considering starting their own businesses.
The study didn’t break out the ages of these people. But other studies have shown a distinct increase in the rate of entrepreneurship by over-55-year-olds. And , in fact, research by the Kauffman Foundation has found this phenomenon not to be a product just of the recession. It revealed a higher rate of startup activity by those age 55 to 64 than 20 to 34-year-olds every year from 1996 to 2007.
But while unemployed people and greying workers are turning to entrepreneurship, let’s not kid ourselves: This is hardly a useful answer to the jobs crisis. For one thing, entrepreneurship isn’t right for everyone. In fact, it isn’t right for most people, especially those who have spent many years in a corporate environment. As for older workers, those who are turning to startups because they have the means to do so and feel free to pursue their dreams, they’re probably in a good position. But, it’s likely that, these days, many of them are choosing this path because they have to. They’re out of work and no one wants to hire them. Or, as Anita Campbell wrote on American Express OPEN Forum:
On the other hand, it may be that those age 55 and over are starting their businesses due to being laid off — and unable to get another job. Self-financing a business is more prevalent among older entrepreneurs. So — what if older entrepreneurs are tapping not only into severance pay, but also into retirement accounts? Are they giving up their retirement future to start a business? This is a risk that could pay off – and pay off big — if the business is successful. But if not successful, it could mean a difficult and less secure retirement for you and your spouse. Because at that age, you have far less time to start all over again if your startup doesn’t pan out.
In other words, taking a chance on entrepreneurship for the older crowd is a great idea if, on the one hand, you have resources to tap or, on the other, there’s no other choice. For everyone else, it’s quite dangerous–or foolhardy.