The world of work is changing fast.
The gig economy and a tight labor market are combining to give employees of all ages more options than they’ve had in decades. While some pursue new jobs with higher pay or more flexibility, others are opting to take the plunge into entrepreneurship.
The U.S. Census Bureau tracked 5.4 million new business applications in 2021, 1 million more than the previous record of 4.4 million in 2020. The data has continued to be strong in 2022.
Age has become less of an indicator of the likelihood that someone will start a business over the past few decades. In 1996, more than a third of new businesses were started by people between the ages of 20 and 34, according to data from the Ewing Marion Kauffman Foundation. Just 15% were started by those ages 55 to 64. By 2019, each group represented about one in four new businesses.
“At this stage in life, there’s no playbook,” said Kerry Hannon, a workplace futurist and author of the new book “In Control at 50+: How to Succeed in the New World of Work.” “This is uncharted territory for so many of us. We’re living longer, healthier lives. You could start a business at 55 that can go for 20 years.”
Hannon sat down with the Orlando Business Journal to share insights from her research on second-act careers. The interview has been edited and condensed for clarity.
What have you seen in your research in terms of people starting out as full-time employees, picking up a side hustle, then transitioning to working for themselves?
Kerry Hannon: The entrepreneurs who succeed are the ones who go slow. They start with really small steps by volunteering, doing project work or by launching as a side gig if they do have a full-time thing, not with audacious goals.
I spoke with someone who was a botany professor at the University of North Carolina and went on to start a chocolate company. She started by making chocolates at home for her friends and family, and then she would provide them to local restaurants. She even went to culinary school — all while still working as a professor. Eventually, once she had tested the market through these various avenues, she was able to launch a website and go to that next level.
What do you see as the biggest differences once someone makes that leap from a side hustle or part-time venture to a full-scale business?
Hannon: I think it’s understanding the cash flow. Especially when you’re starting out, you don’t really know what your monthly inflow and outflow is going to be, so the more time you can give yourself to get a grip on that before you launch as a full-time entrepreneur, that’s going to be to your advantage.
Is there a certain kind of person who is cut out for a second-act career or an entrepreneurial pursuit versus somebody who is not well suited to it?
Hannon: Not everyone is hardwired to be an entrepreneur. It’s sort of a romantic notion to start a business, but for a lot of people, the inconsistency and the vulnerability of it can be rattling.
It takes a degree of moxie, confidence and believing in yourself. You have to be able to sell. You have to understand how to market your product, your service and, yes, yourself. Even if at some point down the road you hire somebody to do sales and marketing, you are still the face and voice of that business, so you have to get comfortable with that.
You mentioned the importance of understanding your cash flow needs before starting a business. What other things do you recommend people focus on as they consider starting a business as a second-act career?
Hannon: One of my favorite things to talk about is my fitness program. There are three parts. What you need to do is get financially fit first. That means before launching your business, take a hard look at that budget. People glaze over at this, but you have to be honest and brutal with yourself about what debts you might have. If you can get lean and mean, this is huge. To not need a certain kind of income in order to pay those monthly bills is liberating; it allows you as you start your business to experiment a little bit and see what’s going to stick.
The second piece is physical fitness. You may say that has nothing to do with entrepreneurship, but it has everything to do with it. When we’re focusing on midlife to older entrepreneurs, ageism is alive and well in the workplace. Whether you’re launching a business and you’re looking for clients or loans from a lender or investment from a venture capital firm, people judge you by your cover. You don’t have to bench press. You don’t have to be a fast runner. Anything you can do in terms of physical exercise gives you energy, a can-do spirit, optimism, and people want to be around you. They want to work for you. They want you to be their client. It is a powerful thing when you are physically fit.
And the third thing is spiritual fitness. That’s not religion; it’s about having some sort of inner core. You might use mindful meditation or yoga or tai chi. I walk my dog. It’s stressful to launch a business, so you want something that centers you and lets you have a respite in your life where you can refresh and return to the challenge of starting your business.
Do you see this as a good time for people to pursue “encore careers” or launch their own businesses? Or is it getting more challenging given the market conditions?
Hannon: I think it is a great time. Remote work, contract work, entrepreneurship, lifelong learning and career transition are the five major trends coming out of the pandemic. People used this time to align their priorities and what matters to them. Adding to that, it just gets better every single year to be able to launch without bricks and mortar.
Want to learn more from Kerry Hannon about how to turn your passion into an encore career and get the most out of being an independent worker? Visit www.vspdirect.com/discover-vsp to download the white paper “From Side Hustle to Splopreneur” today.
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