The era of the so-called ‘olderpreneur’ has dawned. If you’re over 50, forget golf, gardening and grandchildren – think instead about launching a wedding planner start-up or a franchise for a personal training fitness academy.
This shift in attitudes has been driven by several factors. Among them are the increase in the state pension age (especially for women) and fallout from the financial crisis as seemingly secure jobs were lost.
There is also the overwhelming move to defined contribution pensions, coupled with the new pension freedoms, which means pension pots are available to be invested in entrepreneurial ventures.
Data published last year by the Department for Work and Pensions showed that men and women are increasingly working beyond the state pension age1. Over the past 20 years, the average retirement age has risen by two years to 65.1 for men and 63.6 for women. Some 10% of over-65s are now in employment. And the form of that employment is also changing fast as many people – whether they have been ‘let go’ by their employer or opted to leave them – are deciding to set up new businesses.
Indeed, the 21% growth in self-employment since 2000 has been fuelled by the over-50s2..
Professor Mark Hart of Aston Business School explained in a report titled The Age of the Older Entrepreneur that: ‘The shake-up from the recession has provided the impetus for people who are over 50 to say that it’s time to do something that they’ve always wanted to do, and to take an opportunistic approach to creating their own business.’
These are not people who are past retirement, but individuals with years of productive activity in front of them, and their move into the ranks of entrepreneurs opens an interesting new aspect within the UK’s business culture, both socially and economically.
Even modest start-ups can open up exciting new experiences. Rhiannon Rowley likes to relate how she was seated next to the Prince of Wales at a formal event for entrepreneurs. She set up her firm, Abaca, about 13 years ago when she was in her early 50s, divorced with grown-up children.
Her business idea: making handmade organic mattresses and bedframes. Based outside Swansea, she employs a team of five and has been appointed a patron of the Prince’s Prime Cymru initiative for mature enterprise in Wales3. One of her biggest satisfactions was confounding the sceptics: at the event, a banker who had assured her there was no market for her beds found himself seated far from the Prince’s ear.
Abaca embodies values of environmental sustainability and craftsmanship that Rowley holds dear. ‘There is a real joy to making things and seeing customers appreciate something for more than simply its commercial value,’ she says. The products appeal to customers with that same outlook, plus the many people plagued by allergies.
But it wasn’t all plain sailing. Rowley had to mortgage her house and work ferociously hard to compensate for her lack of marketing skills. She will never be rich and does not plan to grow massively, recently terminating a contract with a major department store. But Rowley has built a thriving craft business that, in due course, she will hand on to her daughter, Rebecca, who already
works alongside her.
New income sources
According to Office for National Statistics data, the over-50s account for 43% of those who start their own businesses4. By the age of 70, almost 60% of those still in work are self-employed. This extension of working life is good for our health, said Professor Dame Sally Davies, the Chief Medical Officer, in the 2015 issue of her annual report, Baby Boomers: Fit for the Future5.
But not everyone wants to work long hours the second time around. Part-time self-employment grew by 88% between 2001 and 2015, compared to 25% for those working full time6.
Low annuity rates on pensions make it difficult for many over-50s to cope financially with retiring early. But, conversely, low interest rates with pension freedoms have produced a new source of
funding for start-up businesses and the potential for second careers. It is now possible to access lump sums – or even borrow against the value of a pension – to fund a new venture7.
A good example is Nigel Storer. When he was 51, Nigel launched a credit card payment business with two colleagues. They had spotted a gap in the market and initially focused on small firms who were being fined for non-compliance on strict credit card payment procedures.
Eventually they were able to buy Blue Scorpion, a firm that helps businesses by providing customer credit card security. The financial arrangements that they used were complex and involved drawing down £750,000 from their pension pots. This underlines how financial provisions can be made to help those over-50s who are setting up a new business, and also how important it is to seek expert advice.
Time to start up?
Of course, a business may fail. Latest figures show that the UK five-year survival rate for businesses created in 2011 and still active in 2016 was a disappointing 44%8. Small businesses fail for many reasons, from the owner’s lack of commitment and relevant skills, to a failure to understand the market or to maintain a healthy cash flow.
Buying a franchise may make the leap less daunting: it offers a ready-made route to setting up all kinds of businesses and can offer autonomy and greater flexibility for older workers. The number of franchise-owned businesses has grown by 10% in the past two years to 44,200 and employs 621,000 people9.
Franchise price tags range from the low thousands to several million. At the lower end, a £15,000 payment could be an entry into a business, whether it be bookkeeping, pet food delivery or supplying fashionable curtains and window shutters10. All the main banks may provide loans. The government-backed Start Up Loans scheme can lend from £500 to £25,00011.
Is it time to frame the business plan for that long-cherished start-up, then carefully weigh up the risks?
1 nao.org.uk, September 2017
2 ons.org.uk, July 2016
3 primecymru.co.uk, January 2018
4 ons.gov.uk, September 2017
5 gov.uk, January 2015
6 ons.gov.uk, July 2016
7 thisismoney.co.uk, July 2013
8 ons.gov.uk, November 2016
9, 10 franchisedirect.co.uk, January 2018
11 gov.uk, January 2018