Instead, he’s thinking of going the entrepreneurial route – and he’s hardly alone. The ranks of older entrepreneurs have been growing quickly in recent years, and even more boomers will take the plunge in 2011.
But is it smart to start a business during a recession, when consumer demand and business-to-business spending is falling – especially as a midlife entrepreneur? My answer is yes – with several important qualifications.
Qualification No. 1: You need to identify a business where you’re confident demand will exist and you have the skills and passion to succeed.
Qualification No. 2: Many boomer start-ups are not entrepreneurial ventures in the traditional sense. These won’t be businesses that involve raising funds, hiring employees and renting office space. Instead, many will start out as bootstrapped self-employment operations, run on a shoestring from a home office.
Qualifications aside, there really is no perfect time to start a business. If you believe there will be long-term demand for your product or services, there’s no reason not to get started in a down market.
And midlife can be a perfect time to get going if you have the time and resources to devote to a business. If you’re an empty nester, your living expenses have stabilized and you can devote more hours to the business. If you’ve put away enough of money to live on for at least six months, you’re well positioned to get going, and reinvest what you make back into the business in the early years.
Sole proprietorships are by far the most common form of start-up. The good news about sole proprietorships is that you don’t need much start-up capital to get going. Many small enterprises can be started for a few thousand dollars, thanks to the Internet and inexpensive technologies that enable work from home. The key is keeping overhead low.
Here are some other plusses to consider when starting a business during a recession:
- Expenses fall. The expense of running a business declines during a recession. Suppliers are cutting prices, and fees also fall for services.
- Tough times weed out weak competition. If your business has staying power, you’ll find yourself running a more open field.
- The first customer may be your old boss. Many bootstrap entrepreneurs start businesses in the fields where they formerly worked full time in order to leverage their experience and network of contacts.
- Certain markets tend to be recession-proof. Consider anything related to health care or insurance, including services to doctors or medical equipment companies.