Two weeks before Christmas 2009, Tom Flournoy was laid off from his job in the automotive industry. It was the height of the recession, he was 61 years old and jobs were scarce. His wife’s salary covered the couple’s health insurance and not much more. Flournoy searched for a job for two years before deciding to start his own business, Tom’s Tiny Kitchen. He began making a southern dish called pimento cheese, from an old family recipe, in his kitchen, and sold it at area farmers’ markets in his hometown of Memphis. Those markets were Flournoy’s testing ground.
The product sold so well he approached local grocery stores, asking buyers to sample it. “Luckily everyone who tasted it loved it and agreed to stock it,” he says. Flournoy worked his way into six locations at Kroger’s and within two weeks, the grocery chain had put his pimento cheese in 12 stores. Now Tom’s Tiny Kitchen isn’t so tiny—Flournoy has a manufacturing facility, six employees and aims to put his product on the shelves of larger, national chains.
Flournoy is a good example of a midlifer who unexpectedly lost his job and succeeded at entrepreneurship. “I started it out of desperation,” he says. “Luckily it required a very low capital investment. And even though losing your job is horrible, everyone has some kind of passion or idea they’ve always thought about trying but never had the opportunity or will to do. Losing my job became the opportunity.”
Alana Muller, president of the Kauffman Foundation for Entrepreneurship’s FastTrac program, which trains entrepreneurs to start and grow companies, says the most active demographic for startups are age 55-64. Yet of all the options for finding work we’ve covered in this series, entrepreneurship is, without question, the biggest commitment of time and money. It also involves the greatest financial and emotional risk. Starting a business designed to replace your former, full-time income is a full-time job.
Identify your goals
If you think entrepreneurship is the path for you, determine what you want to achieve. Edward Rogoff, a professor of entrepreneurship at Baruch College in New York City and author of The Second Chance Revolution: Becoming Your Own Boss After 50, says for some, the goal is a job, for others it’s realizing their passion, and for still others, entrepreneurship is an asset building strategy. “Knowing what you want to get from it will help you determine if you need a business that produces income quickly, so you can live off of it, or if you want to build it up gradually and then making a living off it. “
If you have a business idea, use the Baruch College Lawrence N. Field Center for Entrepreneurship’s Venture Assessment Tool to help you identify both your profile as an entrepreneur and the profile of the business you want to start. If your idea isn’t fully formed, you can get free guidance and feedback from your local Small Business Development Center, run by the Small Business Association and located nationwide. Generally, says Rogoff, you’ll need some kind of feasibility study to test the validity of your idea.
See also: Juggling Lessons for Entrepreneurs
Another option is a franchise. Although the initial investment can be high, a franchise is worth considering because the time horizon is limited when you’re starting a business over age 50, and a franchise is a proven entity. “You can still utilize your skills and experience and own it, but the concept is already established,” says Muller.
Know the risks
Midlife entrepreneurs often have greater financial obligations than younger ones—a mortgage, a child’s college tuition, retirement savings—and that can limit their ability to work at a new business without compensation. For someone who has lost a job and is already feeling financially strapped, it may impossible to work for months without earning salary. Even if you are able to generate revenue immediately, you will need to fund the startup, by rounding up investors or taking on more debt. “Most people can’t finance a startup themselves,” says Trexler Proffitt, an assistant professor of entrepreneurship at Muhlenberg College in Allentown, Pennsylvania and an entrepreneur. “You can get loans or outside investors, but most of the financing entrepreneurs get comes from friends and family.” It’s important to treat family and friends the same as you would outside investors, says Proffitt. “Put the offer in writing, the same way you would make an offer to an outside investor. They can always reject it or say you don’t need to pay them interest on the loan–or that they will forgive the loan—but it’s important to formalize the offer.”