Over-50s boosting business start-ups

CALL them wrinklies at your peril. These guys and gals have been around the block several times, they have taken all the knocks and have come back for more. They are the over-50s and they are taking the business world by storm.

GRAEME STEWART

http://thescotsman.scotsman.com/business.cfm?id=1018332004

Helped by the self-confidence that comes with maturity, increasing numbers of people in their "third age" are setting up businesses for the first time and are enjoying a higher success rate than their younger competitors, according to research by Professor Mark Hart of Kingston University Business School.

The more mature business people also enjoy favourable treatment from banks and the benefits of established business contacts and networks. In many cases, they also have a retirement income and assets to put into starting up the businesses.

The latest government figures show there were 465,000 new UK business start-ups in 2003, 19 per cent more than the previous year. The research shows that up to 93,000 of these were started by older people who were employing about 200,000 extra people as a result.

Older people already have networks of contacts and don’t need new ones to make their businesses work, Hart found.

Compared with the 1970s, there are about 800,000 more people aged over 50 who are not working. They do not necessarily appear on the unemployment figures because they are not seeking work but instead might be retired or on long-term sickness benefits.

The government regards this group as a problem because of the potential cost of healthcare and pensions, Hart said. Many of them have no interest or incentive to start businesses, preferring to devote themselves to leisure activities. But there are others with time on their hands who do regard this as a new challenge.

Those who chose to launch new firms however, had a great deal of experience and potential, according to the research.

One study showed they are a lot more realistic and risk averse, and don’t have aspirations to make millions and employ factories full of people. Rather, they want a small business employing just a few people, typically two or three. They also tend to stay in business far longer than their younger counterparts.

Hart said: "There is a great deal we need to discover about this group of people – what motivates them, and how we can help them to thrive and prosper. It is quite clear that they are a bonus to the economy and, as the workforce gets older, they are important to future prosperity.

"We need to do further work, but it does appear that these new employers tend to favour employing people of the same age group, taking more of the 800,000 older workers back into employment."

But he warned there also remained one sensitive issue to be considered: how should these older entrepreneurs be referred to?

He said: "They certainly do not regard themselves as third age, middle aged or anything of the kind. They just want to continue working and setting up their own business and working for themselves is the way to it.

"This is a sector of the workforce which we need to understand and help for the benefit of us all."

CASE STUDY

"THIS is news only to those aged under 50." That’s how businessman Peter Evans responded to Professor Hart’s findings.

Evans, 56, who runs Dalkeith-based company The Message Pad, has been on the receiving end of all the prejudices, but doesn’t feel the need to justify himself, or explain why entrepreneurs from his generation are better bets when it comes to company survival.

Yet when it comes to dealing with banks, raising capital and winning customers, he still gets advised to dye his hair to make him look younger.

Evans said: "That is the kind of attitude the over-50s are up against. We are not whizzkids, but we have a wealth of experience. We have the contacts, the financial backing; we’ve been through it all before and know what it takes to make a successful company.

"Too many of the bright young things are here today, gone tomorrow. They aim too high rather than go for what is attainable and, more importantly, sustainable.

"The over-50s have made these mistakes in the past and got them out of their system. They have learned from their mistakes and put their knowledge to good practical use."

Evans launched The Message Pad in 1994 after working for years in the contact management, call centre and messaging marketplaces. He saw a gap in that market, offering communications support to expanding businesses, with a combined hardware and software solution, and went for it.

The Message Pad’s selling point is that it is the only sizeable company that not only writes its own contact centre software but also runs its own contact centres. It now has a turnover of over £1 million and it employs 30 people.