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What's Your Story Idea? June 8, 2009, 8:19PM EST

Seniors as Entrepreneurs: Their Time Has Come

(page 2 of 2)

Marcia McLean

The idea for "Seniors as Entrepreneurs: Their Time Has Come" came from BusinessWeek.com reader Marcia McLean. McLean owns CapeCoder, a software development firm in Cape Cod, Mass.

While many have elected to become first-time entrepreneurs after 60, a number of economic factors and a job market perceived to be biased against older workers have pushed a number of people into starting their own businesses. With many retirees finding their pensions and 401(k) plans dented—and a rising U.S. unemployment rate, now at 9.4%—the trend toward aged entrepreneurs is poised to grow.

Hard to Get Hired

Sara Rix, a strategic policy adviser at AARP, says that in a recent AARP survey people were asked what they expected to do when they retire, and 15% responded that they were going to go into business for themselves. "Unemployment rates are lower for the older population," she says. "But they are increasing for those 55 and up. And it's been dramatic since this recession began." Rix notes that when older people are laid off, they remain unemployed longer than their younger counterparts. They also are subjected to a number of barriers such as the perception that they lack marketable skills. "In that case," says Rix, "starting a business may seem the only feasible alternative in a down economy even though they might not have an easy go of starting a new business."

This potential new wave of later-in-life business owner will have ample company.

Nine years ago, C. Kumar N. Patel, the inventor of the carbon dioxide laser, the holder of 38 patents, and the former head of the physics and engineering departments at Bell Labs—where he worked for 32 years—started his own business. Then 62, Patel sunk $150,000 of his savings into launching his company Pranalytica. "I guess I was trying to relive my youth," he says. "I was doing something that I had not done before."

However, Patel quickly realized that despite his vast experience he still had a lot to learn about starting his own firm. Initially, Patel's Santa Monica (Calif.) startup developed sensors that could analyze human breath for disease. He shifted direction after realizing physicians preferred to lease rather than purchase such instruments and funding evaporated following the dot-com bust. He then began making ammonia-detection sensors for federal and state environmental protection agencies. That led to a $13 million military contract to create a device that could detect nerve gas. Awarded an additional contract from the Defense Advanced Research Projects Agency (DARPA), the company now makes small lasers to destroy shoulder-carried antiaircraft missiles.

25 Hours a Day

Today, Pranalytica has 18 employees, and Patel says that last year revenues hit $1 million. He expects that to reach $8 million this year. Patel, who will turn 71 in July, says "starting a company late in life is hard, because it takes 25 hours a day to make it successful, and there are only 24 hours. It takes intensive work to start a company. and to do so at 62 is maybe not the smartest thing, but I don't regret it," he says. "It turned out well."

In 2006, Civic Ventures, a San Francisco organization that actively engages baby boomers as a change agent launched the Purpose Prize. Designed to tap into the knowledge bank of those over age 60, the prize awards $100,000 to social innovators who have developed enterprises that create new opportunities and lasting social change.

That first year, Marc Freedman, the organization's founder and CEO, says Civic Ventures worried there wouldn't be enough quality applicants to award five winners. In fact, they were deluged with 1,500 nominations. "We had to give out an additional 10 prizes and 50 fellows in order to honor the top 5%," he says. Each subsequent year of the prize, Civic Ventures has received more than 1,000 businesses (both for profit and nonprofit). One of the 2007 winners was H. Eugene Jones, a former World War II bomber pilot who launched his first business in 1999, when he was 84. Jones devised Opening Minds through the Arts, a program that integrates art education into the core curriculum for at-risk kindergarten through eighth grade children. Initially operating in three Tucson schools, the program has since expanded to three dozen and works with 17,000 students.

"This is only one corner of the market," says Freedman. "And there are thousands of people working in it. They have the knowhow, and they want to work longer. Their priorities have changed, and they expect to be healthy for a significant period of time. They know they are not going to live forever, and they are thinking about what kind of legacy they want to leave."

Jones told Marc Freedman after he won the Purpose Prize: "You sit on a shelf waiting for the billions of years that this earth has been in existence, and you have your turn on stage for a nanosecond. To waste it by doing nothing is unthinkable."

Perman is a staff writer for BusinessWeek in New York.

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