Best age to start a new business
Age 20, Age 40, Age 60? Too young, too old, just right? Is there a best age to start a new business?
Starting a business at any age is definitely hard. While there are things you can do to make it less hard, like follow the lean startup method, start with the customer to ensure you are meeting an actual need instead of a perceived one, surround yourself with a network of experienced entrepreneurs, find a mentor, and more, it’s still hard. But is all of this easier when you are young, or young-ish, or young at heart?
There are pros and cons to every age. Interestingly, though, while we hear of a lot of famous and successful founders who started their businesses in their garage while at university (or instead of going to university), these young founders are really not the norm. They’re the outliers. Most business founders (and particularly most successful business founders) are actually 35 and older.
Lots of people say that you should start a business when you’re in your 20s because its the safest time to take the risk: you’re less likely to have dependents, and mortgages and other financial obligations. All of those reasons are true, and there are definitely some successful business founders who have launched in their 20s.
But …if you look at the evidence, those young ones are not the most likely to have a successful business. In fact, middle age founders are 2-3 times more likely to succeed than those in their 20s or younger. There is a lot of talk about how a successful business is one that has survived at least 5 years. If you look at US census data (2015), 55% of businesses that are 6-10 years old were started by founders with an average age of 36.5. Those in their twenties were dead last at 4.8%.
What’s up with that?
There are a bunch of reasons why those in their mid 30s- mid 40s are more successful. Let’s look at a few.
They are less likely to start a new business because it is “cool”. Young people can get caught up in the excitement of an opportunity and because of the lack of perceived risk mentioned above, might be more likely to launch without thinking the whole thing through or without understanding that the idea might be faddish, without long-term legs.
They are more likely to be able to self- finance, which means less debt. According to the US census, 75% of business owners used personal savings and assets to fund (or at least, launch) their business. In your mid-30s, you are at your peak earning point in your career. If you’ve had the dream of starting a business, you’ve probably socked away some funds to allow you to take that leap. When you have no or little debt, you can make decisions that are in the best long term interest of the company, rather than with the short term obligation of servicing debt hanging over you.
They have education (95% of those surveyed by OnStartups had graduated from college and half had advanced degrees) and understand the importance of having skills/knowledge or acquiring them.
They have experience – they understand the kinds of pitfalls that can be encountered and have thought about how to avoid them. They also have gained the kinds of hands-on skills that give them the confidence that they can run a business on their own.
They have networks – One of the best ways of starting a business is looking at the groups you are a member of and seeing what unmet needs that group has. Groups can be your work, cycling, photography, parenting etc. When you have been working or out in the world for a while, you are more likely to have experienced issues that have no current solution, both in your corporate environment and in your life. It is these problems that provide opportunities for successful businesses, so the more life you’ve lived and the more networks you are a part of, the more problems you’re likely to have encountered.
They have more friends and associates who are entrepreneurs – Research shows that the more friends and family you have who are entrepreneurs, the more likely it is that you will be too.
They have significant industry experience – Kaufmann’s The Anatomy of Entrepreneur research indicated that 50.9 percent of founders from high growth industries have industry experience of 6-15 years before starting their first business. Some of the best business startups come as responses to issues that someone personally faced in their work. When you are in an industry for several years, you understand where the issues are and if you have an entrepreneurial mindset, you start looking for ways to overcome those issues. In many cases, all competitors in the same industry face the same issues (and possibly in other industries as well). If you can find a good solution, you not only have a built-in market for it right away, but you also have some of the contacts to get your idea in front of the right people.
They have access to more startup funds and help from banks as well as from friends and family – They have a long credit history and as such, are able to borrow if necessary. Their friends are also established enough that they may be able to provide financial support in a way that friends in their 20s cannot. Bank of America’s Small Business Owner Report found that 38% of entrepreneurs received a financial gift or loan from friends and/or family. By the way, more than 35% also said they rely on friends and family to help run the business in roles like advisors, employees, investors and partners. They see their family, friends and community as core to their success and those in the mid 30s to mid 40s are old enough to have a well-developed network of friends and community members who can play a role, both in financing and in operating the business.
No one ever said that you can’t be a successful entrepreneur at age 22 or 62. There are many. But research definitely points to the fact that education, experience, opportunity, network, and funding all come together in the mid-30s and position a founder to have the best chance of success.
Whatever your age, stage or goals, we wish you the best of luck! Don’t stress about it. Just start and see what happens!