Victoria van Lennep, Economist Intelligence Unit: Why should we empower mature entrepreneurs?
Alastair Clegg, PRIME: The over 50’s are a growing part of the population. The “silver economy” is going to be worth £127bn in the next 20 years, so it represents an enormous portion of the economy. Many charities dealing with ageing tend to focus on health decline, but I believe that at 50, you still have 10 or 20 years of work left in you.
Small businesses are the backbone of the UK economy and in the last five years, over half of all businesses that were set up in Britain were set up by the over 50’s. We want to be associated with this business agenda as mature entrepreneurs are positive drivers for the economy.
Do the types of businesses set up differ with entrepreneurs’ age?
Age is certainly a factor. Today there are far less tech businesses among the over 50’s, but I suspect this will change. Generation X (those born roughly between the early 1960’s and the early 1980’s) grew up with computers, which means that people now in their 40’s looking to set up a business as an alternative to retirement in the next ten years will be more likely to set up tech businesses.
However, we have seen an increase of people setting up businesses where they are selling their products online, such as arts and crafts enterprises. This allows them to bypass the cost of obtaining premises and means they can get things started from the comfort of their own homes, allowing them flexible working arrangements which many older people seek.
We also tend to see older people start ‘professional’ enterprises such as consultancies or coaching, where they can put their years of experience to good use to help other people.
What would you say in general is the main trigger for mature entrepreneurs to start their business?
There are two main triggers -- one is financial and the second relates to lifestyle flexibility. The financial crisis was probably an accelerator for mature entrepreneurs, also known as ‘necessity’ entrepreneurs, but evidence from the Royal Society of Arts and the Resolution Foundation suggests that entrepreneurship is a positive choice and has become the new model to funding old age. Another interesting trigger regards the willingness of some older people, particularly women, to set up a “social enterprise” that is about giving back to society or lending their years of experience to positive social causes.
How do mature entrepreneurs cope with failure?
Businesses started by older entrepreneurs are less likely to go bust. Over 70% of businesses set up by over 50’s survive five years, as opposed to 27% of those set up by younger people.
The problem is that even though mature entrepreneurs’ businesses are not “failing” to the same extent, they generally grow slowly and cautiously, which would typically frustrate younger people and prompt them to end a business. Mature entrepreneurs are less willing to take risks and that is something we at PRIME would like to challenge.
PRIME is the only national organisation dedicated to providing over 50’s with the support to set up their own business, why aren’t there more initiatives targeting that age group considering its potential? Should they be driven by the government or the private sector?
We support wholeheartedly what the current government has done in terms of removing the compulsory retirement age and rising the state pension age. It makes sense and it sends the right message that people in their 60’s should be active and working.
But at this point the issue should be resolved through the private sector. Currently, 50-years-old seems to be the tipping point where employers start to treat employees differently. There needs to be a general change in companies’ culture: the focus should be on working with big corporations to help them understand the value of this age group, which could be a big source of income for the UK.
Alastair Clegg was interviewed in Start me up: Creating Britain’s entrepreneurial ecosystem, a Barclays report written by The Economist Intelligence Unit. To read the full report, click here.
