Lure of Entrepreneurship Beckons Boomers

Instead of retiring, boomers are starting second-act businesses; some are motivated by an independent lifestyle, others by economic necessity

by Jeffrey Gangemi

In May, 2004, at age 50, Bob Axisa, then vice-president of enterprise technology services for JP Morgan Chase (JPM), had his position eliminated when the company merged with Bank One. "It was really scary," says Axisa. "I started at the bottom and worked up to a good position—what do you do when it gets pulled out from under you?"

Axisa decided not to return to the uncertainty of the corporate world because, he says, "with offshoring and outsourcing of work, no one really has a secure position. At least that's what I think." Rather, he used part of the 49 weeks of severance-package funds he received from his buyout to start a CertaPro Painters franchise (see BusinessWeek.com, 4/12/05, "Extending the Front Lines of Franchising") in Staten Island, N.Y., where he lives. Axisa is entering his third year of business and says his second act provides the kind of security he needs.

Corporate Jobs Too Insecure

Like Axisa, many boomers—or those 78 million Americans born between 1946 and 1964—are leaving corporate jobs to start their own businesses. And it's not just because they're ready to retire; though some have the time and money to try life as an entrepreneur, many don't. They, like Axisa, are often worried about disturbing corporate trends like layoffs and pension cuts that are leaving many in their age bracket with a tough road through retirement.

"Baby boomers are looking at starting real businesses—looking for another 10- to 12- to 15-year career, God willing," says Paul Magelli, senior scholar-in-residence at the Kansas City (Mo.)-based Kauffman Foundation, a center promoting entrepreneurship. "Just the topic of whether Ford (F) and GM (GM) would engage in consolidation talks sends a huge tremor among a huge, experienced workforce—they need to be thinking about opportunities with some kind of income security. It's somewhat subdued, but that anxiety is still very much in the workplace, from the reports we get." Entrepreneurship is, somewhat surprisingly, increasingly seen as a stable way to ensure financial security, Magelli says.

About one in three self-employed workers ages 51 to 69 made the transition to self-employment at or after age 50, according to a 2003 AARP Baby Boomers Study, and 15% of the 1,200 adults between 38 and 57 who were surveyed planned to start their own businesses. "I think we are likely to find more people likely to go into self-employment. The [15% planning to start businesses] is not a statistic to sneeze at, even if the proportion of older workers who are self-employed remains stable," says Sara Rix, strategic policy adviser for the AARP.

Business Experience Reapplied

And these boomers aren't just dreaming up part-time gigs for some extra spending cash. Some are opening high-growth, angel-worthy second acts. Bill Payne, a consultant at the Kauffman Foundation and an active angel investor for more than 20 years, says he's seen a marked increase in boomer-led companies seeking funding. He prefers funding such companies because of their founders' level of expertise and competence. "From an investor who looks at hundreds of business plans per quarter, we are encouraged when we see some senior guys who have a lot of vertical experience—we know they're bringing business savvy and that they're reasonable, rational people. We definitely are seeing more people in the boomer age bracket," says Payne.