Think you're too old to start that new business? Think again
How many budding entrepreneurs have this dream?
You just came up with a new app under the company that you and you buddy started a couple of summers ago in-between semesters. At first, the app was formed on a good idea, but there were major technical glitches to repair and a couple of user features to improve on.
After numerous attempts and enduring enough trials to realize you're are both serious about the endeavor, you and your partner finally got the app to work just the way you wanted it to, and after some strong interest in the app from your friends and classmates, you convinced your family members to put up the necessary funds to take your company and app to the next level of success and notoriety.
Then the following semester, instead of going back to campus, you and your buddy hightail it to Silicon Valley -- just because you feel you have to in order to be successful-and from there you rent a tiny apartment that serves as your office, your post-college frat house and your sleeping quarters.
And just over one year after moving to California, you're able to secure larger dollars from a major investment firm, and you and your buddy live happily ever after, posing on the cover of every tech magazine in the country. And of course you pose on every cover wearing a simple t-shirt and a pair of tattered jeans, just to show that none of your youthful rebellion was lost in your quick rise to success.
That’s a nice dream, isn't it?
And for many, like the Mark Zuckerbergs of the world or the Yale students who secured a $15 million investment to further their website RapGenius.com, that dream became a sweet reality, which made a lot of people believe that most of today’s successful startups are created by tech-savvy students in their 20s, when in actuality most successful businesses are started by entrepreneurs between the ages of 30 to 49, according to new research.
Some might say the resarch findings will cause some who believe they're too old to start a business to put their fears away and actually start one.
According to the Kauffman Foundation and the Internet document company Legal Zoom, most of the startups in the United States that become successful aren’t those tech-based companies that have young and hip college students at the helm.
“Most of the successful startups are not the kind spawned in Silicon Valley," said the Director of Research and Policy at the Kauffman Foundation, Dane Stangler. “I don’t want to use the word mundane, but they’re run of the mill.”
Kauffman and Legal Zoom interviewed a total of 1,431 business owners and found that 57% of them started their businesses after their 20s and spent at least six years working in that industry before creating a startup.
Additionally, 44% of the business owners started one company prior to the successful startup, and 52% created more than one business, researchers said.
Arguably the biggest reason why most successful startups are created by older people and not the tech-savvy 20 somethings is because older entrepreneurs typically don’t have the same financial barriers that younger people do.
And since older business owners tend to work in their industry for years and can save money, many of them don’t have to search for finances or ask their family members for seed money, as the study showed only 20% of business owners between the ages 30 to 49 had to ask their families for money or had to get finances from a bank or home equity loan.
“With over 80% of early-stage business owners using personal funds to finance their companies, founders are decidedly willing to take on risk,” said Legal Zoom’s CEO John Suh.
“However, these business owners need additional financing if they are to succeed in helping drive our economy forward. Of the 60% of respondents who said they face business difficulties, 45% cite lack of access to credit.”
And just how difficult is it for a startup to become successful?
In findings revealed by researcher and lecturer Shikhar Ghosh, and reported by The Wall Street Journal, three out of four startups fail miserably.
Noam Wasserman, who’s a professor at Harvard Business School told a New York Times reporter that many startups fail because having a good idea that investors eventually buy into is one thing, but taking those investment dollars and doing the right things to grow your company is an entirely different skillset.
“When you’re the creator of a company, you’re increasing the chances that you’re going to get fired," he said.
“And when you’re a smashing success, you’re also heightening the chances you’re going to get fired. There are some very concrete reasons for that. Often you begin with a technical founder, a scientific founder, someone with deep knowledge who is the best person to lead the charge during the early development of the product.”
“But as soon as they succeed at hitting that milestone, they have to go and build a company. Often they have the exact wrong set of skills for the next stage of development,” he said.
And as far as that wonderful dream about creating your own app and becoming the next beloved whiz kid, you may want to dream a different dream, because the reality of the situation is that two-thirds of the new apps released fail to get even 1,000 downloads, so of course they have to close up shop.
Stangler from Legal Zoom says his company’s research may not give a complete view of what the proper age is to begin a business, but after so many people were interviewed, he says it provides a clearer picture of what the average successful startup person looks like, in terms of age and experience.
“While the survey cannot be considered an entrepreneurship barometer, it does provide insights into the makeup and thought process of startup business owners,” he said.
So again, if you thought it might be too late to start that business and put your ideas to action, chances are, you’re dead wrong.