When Age Matters – The Rising Trend of ‘Seniorpreneurs’
In the high stakes of business start-ups, the older you are the more likely you are to succeed, according to Professor Roxanne Zolin, whose research on senior entrepreneurship in Australia shows entrepreneurs get better with age. Appearing on Channel 7’s Weekend Sunrise, Prof. Zolin explained that older entrepreneurs have three key attributes that drive success: human capital, social capital and financial capital. Seniors bring a wealth of experience, knowledge, and expertise into a start-up, with established contacts they can leverage on and the financial firepower to drive the business.
In Australia, baby boomers have now become late bloomers, contributing to 34% of all new start-ups in the country. There is more entrepreneurship activity for 55-64-year-olds in the country than any other innovation-driven economies, with up to 590,000 small businesses in Australia owned by someone aged 50 and above. The average age of all entrepreneurs in Australia is 45, but the average age of senior entrepreneurs is 57.
Senior entrepreneurs may just be the new normal in the start-up landscape. We examine how older entrepreneurs are turning age into a winning business formula.
Entrepreneurial orientation increases with age
Entrepreneurship drives innovation. Successful entrepreneurs have, by definition, figured out a way to do things better than anyone else. The general perception is that young people are the ones with the imagination and creativity to drive business ideas. So how is it possible that the older individual is the one with the better entrepreneurial orientation?
Entrepreneurial orientation, based largely on Canadian Economist Danny Miller’s work, is the degree a firm or person is prepared to innovate, take risks and act proactively. All the traits of a gung-ho-twenty-something? Apparently not.
Human capital theory suggests that the individual with more human capital is most likely to succeed in a task. Human capital is the stock of knowledge and skills that individuals have. They include but are not limited to unique insights, skills, cognitive characteristics and entrepreneurial aptitude. They can also include acquired attributes like work habits and productivity.
In the race for human capital, the 50-plus entrepreneur wins hands down. The older individual has a formidable range of weaponry to establish entrepreneurship prowess, including depth of knowledge, experience, wisdom, confidence, technical and managerial competencies and specific industry know-how.
Di Armbrust started OutcomeHR when she was 57, and has built a solid company reputation helping SMEs develop strong cultures. Armbrust insists she has not experienced any barriers as a consequence of her age. Prof. Zolin’s research suggests the same, with the majority of senior entrepreneurs interviewed sharing that, as entrepreneurs, they have not experienced any of the age discrimination that is perceived as normal in Australia’s workplace. For Armbrust, age is a benefit. “As an older first-time entrepreneur, my biggest asset is all that IP inside my head,” Armbrust said.
We’re old, not dead!
Shark Tank’s ‘bad cop’ Canadian Businessman, Kevin O’Leary, likes to tell budding entrepreneurs who have failed to impress: “You’re dead to me!” Unfortunately, there’some truth in his words – employers today tend to think the same way. Who of us hasn’t heard (or said) this phrase: “I’m looking for someone young with fresh ideas.” In an age-biased employment market the bottom-line is: when you are old, you have nothing else to contribute.
Psychoanalyst Erik Erikson’s research into developmental psychology debunks this bias. According to Erikson, humans developed in 8 stages from infancy to adulthood. The seventh stage (typically between 40-64) is the stage of productivity and creativity. Individuals in this stage are supremely motivated to generate value for themselves and for others.
This drive can motivate older adults to take up challenges that others may think twice about. Combined with their enriched human capital, social networks and access to funds, the chance to succeed is undoubtedly higher.
Carolyn Hartz started her business, SweetLife, at 55. Fuelled by years of research into diabetes (she was diagnosed as a pre-diabetic in the late 80s), Hartz travelled to America to meet the manufacturers of Xylitol. When Hartz started her home import business in 2002, she openly shares that she did not even know how to use email. Seniors embarking on startups face many challenges but the drive to create something meaningful is a psychological imperative that propels the senior entrepreneur to venture into the unknown. In the case of Hartz, this dogged determination is paying off. SweetLife is now on the shelves of every supermarket and most convenience stores in Australia. Her recipe for success is simple: passion, persistence and commitment to a product you believe in.
It’s not just what they know, it’s who they know
If you have read or watched anything by Wharton Professor and New York Times Bestselling Author, Adam Grant, you will know that success is not just hard work and talent – it’s also who you know. That is why business leaders are always networking.
The older entrepreneur may not be a social media wizard, but networking the old school way has positive outcomes. The Wall Street Journal survey on business networking found that 82% of respondents say face-to-face interactions produce better business outcomes.
Having worked longer in the workforce, senior entrepreneurs have sophisticated networks they can call upon for additional finance, human or people resources. As entrepreneurs, they can leverage these contacts to grow their business. Investors are also more likely to put their money on a seasoned business person with the relevant experience and know-how than they are on the fresh-faced college grad with the big ideas.
When training and education matters
Prof. Zolin’s research into senior entrepreneurship shows Australian senior entrepreneurs (96%) agree that education and training are important for start-up success. Most senior entrepreneurs (86%) also believe that education and training are continuous improvements – required not only at the start-up process but as the business grows.
While this may be on the wishlist of many senior entrepreneurs, the reality is that Australia needs to do more to facilitate an entrepreneurship ecosystem that can accommodate seniors. Prof. Zolin’s research reveals that our government is not in tune with the potential of senior entrepreneurship as a vibrant contributor to the economy. The lack of government support in the form of grants, education and training access, coaching programs and other initiatives is creating barriers to entry for seniors who could still contribute value to our society.
MBAs graduates driving start-ups is trending
B-schools are fast becoming incubators for the next generation start-ups with more MBA graduates starting their own business – including those who maintained mainstream business jobs after graduation. According to a report by the Financial Times, 24.4% of graduates will start their own business within 3 years of graduation. This number does not include those who are doing business on-the-side.
The reason for this is that MBA courses have significantly improved the quality of their curricular and extra-curricular activities to support aspiring entrepreneurs, making it easier for graduates of the program to test the entrepreneurship waters. The odds of them succeeding are higher with an MBA if they do venture down this path.
About Roxanne Zolin
Professor Roxanne Zolin holds a PhD from Stanford University as well as a Master of Sociology. She also has a Master of Business (Marketing) from Monash University and a Bachelor of Business (Management) from Queensland Institute of Technology.
Prof. Zolin has won numerous awards and grants for her research into entrepreneurship. Her other research interests include project management, teamwork and trust.
The writer wishes to acknowledge the following theorists whose ideas helped shape this article.
Danny Miller, Economist and Rogers-J.A.-Bombardier Chair of Entrepreneurship at HEC Montréal for the use of entrepreneurial orientation.
Adam Grant – Professor, Wharton School of Business and New York Times Bestseller for his management theories.
The late Gary Becker, Economist, and Professor of Economics & Sociology, The University of Chicago for the use of human capital theory.
The late Erik Erikson for the use of the eight-stage theory of identity and psychosocial development.
This article was written by Christine Lim on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB.