Pitfalls of baby boomer entrepreneurship
Here's a great addendum to a story I cowrote recently on baby boomers becoming late-in-life entrepreneurs. It comes from Jeff Cornwall, director of the Center for Entrepreneurship at Belmont University in Nashville and author of the indispensable Entrepreneurial Mind blog. Cornwall makes two great points about the piece. First, if you're a boomer contemplating turning your lifetime expertise into a consulting firm, Cornwall warns, there is a downside:
A consulting business is tied to the activity of the owner and has no residual value that someone will be able to buy. A business has value to a buyer if it creates ongoing cash flow into the future. If the boomer entrepreneur/consultant retires, the cash flow from his/her consulting activities ends. There seems to be a myth that entrepreneurship and self-employment are secret paths to wealth. If these Entre-Boomers didn't prepare in their working years, they believe that they can start a business when they reach retirement age and it will magically create wealth. It just doesn't work that way.
Second, becoming an entrepreneur requires the sort of "selling skills" that many boomers may lack if they have spent years in the corporate world: [Selling] is a skill that Entre-Boomers seem to lack. Years of corporate life have taken the hustle out of their skill set, which John Challenger, CEO of outplacement firm Challenger, Gray & Christmas, reminds us is key to entrepreneurial success. My experience with working with late-in-life entrepreneurs is an alarming overconfidence. They seem to think, "How hard can it really be to run my own small business?" Trust me, it is a lot harder than most of them realize. And their corporate experience provides little knowledge and experience that help with the day-to-day challenges of running a small business.
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