Going Your Own Way
Baby boomers are rewriting the rules of retirement again. This time they're tapping their nest eggs as entrepreneurs
It all started with a cookie. Dark-chocolate chunk with hazelnut, to be specific. And with that first scrumptious 2-ounce morsel, Franny Martin left the corporate world behind for good. In 2002, after three decades doing marketing for fast-food giants Burger King, Domino's Pizza, and McDonald's, Martin started up Cookies on Call, baking out of her home in Saugatuck, Mich. "Bill Gates started in his garage, and I started in my kitchen," she says.
Cookies on Call isn't exactly the Microsoft of the cookie world, at least not yet. Currently, there are one storefront in Saugatuck, a thriving online order business, and 61 varieties of handmade cookies to choose from. But visions of a global cookie empire aren't what nudged Martin out of the corporate world into "Frannyland," as she likes to call it. "I just decided if it was my last day on Earth, is this really what I wanted to be doing?" she recalls. "I mean, I lived it, and being in corporate was great, but that's not how I would want to be spending my last day on Earth. A really good friend of mine had taken ill--she has passed away now--and I just realized that life is really too short to be doing something that I didn't want to be doing anymore."
A new chapter. That sort of existential reflection probably strikes home for a lot of baby boomers these days. The first of that influential generation turns 60 this year--Martin herself hits the magic number in May--and many of them who toil as wage slaves are surely asking themselves, "Is this all there is?" or "What comes next?" For a growing number, the answer involves leaving their current job--but not retiring. Like Martin, they're instead choosing to start a new chapter in their working lives, one where finally they're the boss.
"There's no question that senior entrepreneurs are out there," says John Challenger, CEO of Challenger, Gray & Christmas, an outplacement consulting firm based in Chicago. A 2005 CGC study of 3,000 job seekers found that 13 percent started their own businesses in the second quarter, up from 9.9 percent in the same quarter a year ago. And of that group, 86.6 percent were over 40, evidence that the next big wave of entrepreneurs may be seasoned workers, not college dropouts in Silicon Valley with a breakthrough technology concept. "There's more and more access to self-employment possibilities as people decide to put off retirement as they get into their 60s and 70s and 80s," Challenger explains.
In addition, a CGC analysis of government data shows that those 55 to 64 and older represent one of the fastest-growing groups of self-employed workers. Some 1.8 million American workers ages 55 to 64 are self-employed outside of agriculture, up 29 percent from 2000, according to the Labor Department. The number of do-it-yourselfers 65 and older has grown 18 percent to 756,000. And boomers 45 to 54 years old make up more than a quarter of the nation's 9.6 million self-employed. Overall, boomers and older entrepreneurs now account for 54 percent of self-employed workers, up from 48.5 percent in 2000.
Certainly middle-age angst and a quest for personal fulfillment are big drivers for many boomer entrepreneurs. They were for Mary Rooney Sheahen, 56. The registered nurse and former hospital CEO runs Wild Clover Day Spa. The full-service spa (Turkish salt scrubs, seaweed baths) is located at a boutique hotel in Galena, Ill. "I was an oncology nurse early in my career and saw the effects of stress and illness," Sheahen says. "To be able to be on the prevention end was a dream come true." Even better, Sheahen also gets to work with her husband, Chuck, who retired from being a firefighter about 18 months ago. "He is instrumental in many ways at the spa," she says. "The staff call him 'Rico the Towel Boy,' and they love having him around to fix things."
The catalyst that prompted Sheahen to "take the plunge" was one that many boomers can relate to: She lost her job in a corporate reorganization in 2000. That shake-up provided her with not only the need to find another job but the means as well--she got a great severance package. The financial windfall from a severance deal or a pension buyout gives older entrepreneurs a huge edge over younger risk takers. "Such packages can be repositioned toward new business costs or give them much larger borrowing power at the bank," says small-business consultant Anita Campbell. "They are more likely to be seen as good credit risks with collateral to back up a small-business loan."
Of course, most workers aren't going to get downsized, offshored, or outsourced. More likely, they will simply find themselves in their 60s without the financial ability to retire. Sure, maybe they can tap into savings to maintain their current lifestyle. But what if disaster hits and dries up those lifelong savings? A 2005 Merrill Lynch survey found that the unpredictable cost of illness and healthcare is by far boomers' biggest fear. They are about three times as worried about a major illness (48 percent), their ability to pay for healthcare (53 percent), or winding up in a nursing home (48 percent) as about dying (17 percent).
Then there are the kids. Boomer marketing expert Phil Goodman notes that his research shows that two thirds of boomers say they feel obligated to financially help their adult children: "So for most of them, [starting a business] is not because they don't know what to do with their time; it is because they have to work."
And work they do. Starting your own business may bring lots of emotional and spiritual fringe benefits, but it means lots of long hours, too. John Nicholson and his wife, Marnie, run Company Flowers & Gifts, Too! in Arlington, Va. A former journalist and lobbyist, John Nicholson, 69, retired from that world at age 56 and bought an old flower shop. "We figured we had to learn the business from someone else," he says. "In reality, we probably overpaid for a customer list of mostly dead people, but in doing so we felt more confident about doing better."
Be the boss. Buying an established business is easier than ever. There is an increasingly well-organized market for the purchase and sale of small businesses. "Not so long ago if you wanted to sell a small business, you asked around to your lawyer or your accountant, or you placed an ad in the local newspaper," Campbell says. "Now there are brokerage networks where a business can be listed for sale [ www.bizbuysell.com]."
There's plenty Nicholson loves about being self-employed. He spends all day doing something he enjoys--and can always take off when he wants to see a museum. But it's not all a bed of roses. "I now work six days a week, 10 hours a day, and make less money than I've ever made in my life," he says. Plus, being the employer instead of the employee presents new challenges, especially since the couple pride themselves on being detail-oriented, hands-on managers. "My wife and I often remark how we seem to be working for our employees rather than letting them work for us," he says.
Going it alone. If being a boss to others sounds like a bummer, there's good news. The Internet and globalization make being a one-man band easier than ever. Consultant Thomas Frey of the DaVinci Institute sees more and more boomers adopting what he terms the "empire of one" model. This is a business that outsources everything. Products manufactured, for instance, in China or India are sent to a distribution center in the United States, with customers in the United Kingdom and Brazil. Manufacturing, marketing, bookkeeping, accounting, legal, and operations needs are all outsourced to other businesses around the world. "The empire-of-one business model is one with great appeal to former corporate executives with global contacts and good ability to manage things remotely," Frey explains.
But even if you go it alone, there are going to be plenty of hassles. Running a business is not like working at your favorite hobby except that you're plugging away at it all day. Hobbies don't need customers. Businesses do. And focusing on attracting customers will be a critical, if unglamorous, aspect of your new career. "There's a lot of people who would like to be entrepreneurs, and they're experts at whatever their field is," Challenger says, "but they don't want to spend a lot of their time looking for new business, and that is key to an entrepreneurial business."
Talk to entrepreneurs, boomer and otherwise, and you'll often hear about how the key to success is having passion about what you do. No arguing that. But Nicholson reminds any potential small-business people out there to keep all that passion talk in perspective. At the end of the working day, you still have to make at least a bit of money. "No sense in deciding to become an outstanding potter making and selling the world's most desirable clay pots when you really don't like to sell what you make," he says. "Becoming an entrepreneur means becoming a hustler, at least to a small degree. Otherwise, be resigned about being happy working for someone else."
This story appears in the April 3, 2006 print edition of U.S. News & World Report.