A business radio program gave an example of a man who retired and invested R5,000,000 of his savings into a “Vet Koek” (a traditional Afrikaner pastry made from dough which is deep-fried in cooking oil) business in a coastal Town which shortly thereafter went bankrupt.
The radio topic was on how people in the mature or retirement years can start something of their own. With many people needing to work beyond their official retirement date and with people living longer because of healthy lifestyles and modern medicine, there is much debate about entrepreneurship or small business ownership post retirement.
The business adviser from a small business organisation said it was important for people over certain age to choose a field to operate in where they had accumulated much experience. This advice is very similar to Warren Buffet’s advice about making investments in your “circle of competence”. It makes sense because the person who started the “Vet Koek” business had entered a new and unknown field.
The problem is that people who have had a long career in business are used to a stable, safe and planned environment. Entrepreneurship, requires hunting for resources such as investment capital and talent and for opportunities with in markets even if they are familiar with particular industries. Some business advisers like to use the metaphor of a hunter versus a farmer but with farming impacted by many changes this is not a good metaphor. The cliche is that a farmer doesn’t have hunting instincts and merely sits back and watches over his or her crops or livestock. This is false: farmers these days have to deal with optimising rotating crops, labour issues, high energy costs and reliability of power supplies as well as the need for heightened security.
An Australian woman who launched her product in her mid-50s recently described how age discrimination affected her ability to find any investor or partner. Doors were slammed shut in our face. So she had to persevere and despite the daunting challenges, she took some of her savings to launch her start-up. But this is where the mature person needs to be very careful. You can’t eat into your life savings because you may never have enough years to make up losses or a total wipeout of your lifelong earnings.
One piece of advice that may make sense is to start small. Take small steps. We’ve even seen the introduction of more and more pop-up shops where products and services can be tested before they are scaled up. Clothing stores are doing that with three-month trials and in the US I’ve even seen a pop-up taco shop (combined with an idea accelerator environment). It helps people develop side projects along with events in the evening including workshops from start-ups or established businesses.
New business ideas, as long as they create value for potential customers, can be conceived, designed, implemented and operated by anyone at any age. It’s best to make sure you have a helping hand such as the assistance from a mentor or seasoned small business adviser.