Encorepreneurs Are Making Second Acts Look So Easy
Since we’re boomers starting a new business here at Next Phase Communications, we thought it would be fitting to take a look at who else out there has started a business in their next phase. I’ve found there’s a lot of variety in age and reason for starting a business from mid-to-late fifties or often, you’ll see, even later. I was surprised at the numbers, although I shouldn’t have been. Rather than an ending, for many boomers, retirement—forced or otherwise—is actually turning out to be a new beginning.
They’re called “encore entrepreneurs” (sometimes called “greypreneurs”) and while the statistics that have been gathered point to them being mostly providers of business services with food products coming in second, these encorepreneurs are starting all manner of businesses from products and services to serve the aging in place market to exotic tour guides, Airbnb hosts, interior decorators and inventors. Even cannabis is seeing a growth in 50+ owners, with women stepping up to major roles in new cannabis businesses all over the country.
The idea of retirement is a modern construct
In 1889 Otto Von Bismarck created a system where older workers could be “retired” and paid to leave so that younger workers could find employment. Fast forward forty years and the US had a template for Social Security when Roosevelt signed the order in 1935 hoping to mitigate some portion of the pain wrought by the grinding Depression.
But in today’s world retirement doesn’t make sense any longer—not financially, emotionally or healthwise. For one thing, in 1889, the average life expectancy was 45 years old. Now it’s approaching 80, with 90 being common place. According to Ken Dychtwald, founder of AgeWave, “If we used Bismacrk’s model, we’d be retiring people at 98.”
In the business world, boomers and late stage Gen Xers are being retired before they’re expected retirement dates due to cost cutting measures that in my opinion, more often than not amount to ageism. In fact, a recent AARP study called The Health and Retirement Study that started in 1992 and followed 20,000 workers from age 50 to death, found that “the number of people who said they were at least partially forced into retirement has increased from 33 percent in 1998 to 55 percent in 2014.”
So employers are forcing older workers out for reasons that the study didn’t get into but I’d wager have to do with not wanting to pay the higher salaries that are a natural outgrowth of employees who have been at a company for a few decades. When those employees are lucky enough to find new work, they’re often paid a fraction of what they were making before they were pushed out.
These forced retirements can wreak havoc on a thoughtful and otherwise well-planned retirement that factored in working until 65 and stepping up retirement savings once big ticket items like college are out of the way.
Forced early retirement isn’t good for employees either emotionally or physically. As noted neurosurgeon and dementia expert, Dr. Daniel Amen, said, when it comes to retiring, ”Don’t do it. It’s bad for your brain.”
Results from a recent study of Japanese centenarians backs up Dr. Amen’s conclusion. The Okinawan Centenarian Study followed 900 Okinawans and found they are very healthy, living an average seven years longer than Americans, and have a lot of longevity for a number of reasons. One is they don’t know or understand the concept of retirement. In fact, they don’t even have a word for it in their vocabulary.
I suppose you could argue that the word for retirement doesn’t exist because these people are feeling so good in their later years that they enjoy working, but I think it’s more of a mindset thing; expectations of being useless after a certain age simply aren’t part of the culture.
Just like it made sense in 1935 to institutionalize retirement based on the financial realities of the time, it makes sense now, based on financial realities, to retire the idea of retirement—or at least redefine it for a new generation.
The rise of the Encorepreneur
It’s not a new idea that someone in the second stage of life and career would strike out on a new business venture. Ray Crock famously did it way back in the 1950s. Older entrepreneurs have the benefit of well-developed skills, temperament, experience working with many different types of people, a broad list of long-held contacts and enough experience to know how to take setbacks in stride.
More recently though with the baby boomer generation aging into retirement, the term encorepreneurs has made it into the mainstream to describe business owners who have left their corporate jobs and struck out on their own or with a partner to start some new venture, offering a business or service they’re passionate about.
That certainly describes the two of us and it looks like we have plenty of company.
The 2016 Kaufmann Index of Startup Activity report found that 24.3 percent of all new entrepreneurs are aged 55 – 64, and that number is growing.
Another report from Guidant Financial in 2019 has similar results. Interestingly, most (32%) finance their new venture with cash. It makes sense that older entrepreneurs who’ve worked their entire lives can dip into savings, especially if they’re taking a bet on themselves. Second place for financing, coming in at 13%, was using retirement funds—called Rollovers for Business Start-ups (ROBS)—as a way to dodge incurring tax penalties.
As to motivation, most business owners didn’t list being laid off early in the top five reasons to start a business after 50 (layoffs only got a 15% share of the reason). Instead, number 1 at 26% was “ready to be their own boss.”
Encoreprenuers are popping up all across the country, proving that a second (and sometimes third) act is not only possible, it’s here and it’s happening in all sorts of places from big cities like New York and Chicago to small towns. Here in Sonoma County Leslie Goodrich started LaLa’s Jam Bar and Urban Farmstand and Suzanne Guenza, started Petaluma Toffee Company. David Ehreth’s second act is Sonoma Brinery where he sells mouthwatering, salt-cured, kosher pickles in Healdsburg and Shannon Hattan of Fiddler’s Greens is just one of a number of women shaking things up in the cannabis industry.
In future posts we’ll be conducting more in-depth interviews with encorepreneurs to tell their stories and showcase their successes. We believe it’s important to combat the idea that after a certain age, disappearing is the only available choice. It isn’t.
And encorepreneurs are proof