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"This little gem of a book offers sage advice..."
Too Young to Retire,
the perfect retirement gift for those who aren't calling it quits, is
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It’s Never
Too Late January 17, 2006 By JEFFREY STEELE, Special Advertising Sections Writer
Berta Ujueta was a cake baker, decorator and manager for a supermarket chain when a back injury forced her to leave work. Rather than remaining idle, the 50-something woman decided to open her own bakery, La Crème Bakery in Woodland Hills. Kerry O’Brien, 56, had always wanted to run his own business, but he never made good on that dream until he was laid off by his longtime employer. Two years later, he said his cleaning-supply firm, Fontana Cleaning Products Corp., is “growing nicely.” Michael Challgren, 57, was laid off, too. He took another job, but then realized he’d rather be working hard for himself, not others. In 2003, he launched Free Flow, an Agoura Hills automotive performance center. Ujueta, O’Brien and Challgren are among area residents in the vanguard of a new breed of entrepreneur: Those who start their own businesses after the age of 50. They have found that age can be a boon rather than a barrier in the launch of a new company. Can be challenging Volunteers with the Service Corps of Retired Executives (SCORE) see lots of aspiring entrepreneurs. Bill Morland, chair of the Santa Ana-based Orange County SCORE Chapter 114, said his volunteers hold small-business counseling sessions with more than 5,000 people a year, about 5% to 10% of them 50 or older. Starting a business at an older age presents challenges, say small-business counselors. Among the hurdles is the fact that energy levels aren’t as high at 50 or 60 as at younger ages, and starting a new business requires plenty of energy. In addition, if a younger person loses her shirt on an entrepreneurial venture, she has a lifetime to recoup the losses. That’s not the case with someone approaching or beyond retirement age, Morland said. These concerns notwithstanding, there are many reasons to bet on an older entrepreneur achieving success with a new business venture. One of the biggest is experience. “They’ve lived for 50 [plus] years; there’s a lot they know,” said Richard Hadel, chapter co-chair of Glendale- based Los Angeles SCORE Chapter 9. For instance, before starting his own company, O’Brien learned the ins and outs of the cleaning-supply business working for 15 years for another company. That experience was crucial in helping his business, which now competes with his former employer, become a success. “It helps if you have decades of relationships and know the industry,” he said. Experience also often means less impulsiveness. “An older guy says, ‘Let’s do a business plan. Do I have enough money? What about the location?’ He takes more time,” Hadel said. Hadel also believes older people have an easier time raising capital for new businesses. Unlike younger people, many older entrepreneurs are probably making good to excellent incomes and, especially in California, have substantial equity in their homes. What’s more, older people are often freed from the time-consuming obligations of raising a family and/or pursuing an education, said Steve Sarchett, chapter chair of Oxnard-based Ventura SCORE Chapter 255. That means they’re able to dedicate the time to start and run a successful business. For instance, Ujueta launched a similar bakery with her husband back in 1980 but chose to close it in 1983 because the couple felt they weren’t spending enough time with their children. Now that their children are in their 20s, the Ujuetas decided to try again, feeling they are now able to work long days if necessary. What’s more, businesses established by older entrepreneurs are often based on a passion built over a lifetime. “People starting their own businesses at older ages usually are doing something that they are enthusiastic about and have a real interest in,” Sarchett said. In fact, that’s the first consideration older people should keep in mind when developing a business idea, said Howard Stone of Palm Beach Gardens, Fla. who is co-author of “Too Young To Retire” (Penguin, 2004), which covers more than 100 ideas for entrepreneurial ventures. “First, pick something that comes out of your personal passion,” said Stone, whose website (www.2young2retire.com/trueStories.html) offers inspirational stories of people in their 50s through 80s doing extraordinary things, including running businesses. Careful preparation “The most common problem for people starting a business at any age, including over the age of 50, is they haven’t done sufficient planning and are undercapitalized,” Morland said. “The two are actually tied together. They’re undercapitalized because they don’t realize what their financial needs are truly going to be. And, as a result, they run out of cash. When starting a business, cash is king. You have to have it on your own, through friends and family, or from a bank.” Entrepreneurs who plan by preparing a business plan with cash-flow projection and profitand- loss projection for preferably the first three years improve their odds of success immeasurably, Morland said. (Templates for these projections can be downloaded by visiting the SCORE website at www.score.org/template_gallery. html.) Don S. Doner, senior business counselor with Los Angeles SCORE who counseled Ujueta and Challgren, agrees. Launching a new business is not a time to engage in shortcuts, Doner said. “If they do their homework and research and do a comprehensive business plan, they lessen their risk and are more able to be successful,” he said. “If they don’t do those things, it’s kind of a guarantee they won’t be successful.” Next, it’s wise to seek smallbusiness counseling. Free counseling from volunteers with extensive business experience is available through SCORE— either online or face to face. The sessions were extremely helpful to Ujueta, O’ Brien and Challgren, they said. “I really knew what should happen before I started,” said Challgren, whose company installs custom and performance exhaust systems on upscale vehicles. In for surprises But surprises do often await those who start their own businesses. For O’Brien, the surprise was the number of hats he had to wear. “Neither my partner nor myself had much experience with the financial end of things,” he said. “We’ve gotten good at it. But at the beginning, we had to read a lot of books and get advice from SCORE.” Many start-up business owners are overwhelmed by the extent of multi-tasking required, said Morland. “It requires a realistic timemanagement discipline,” Morland said. “The most important resource entrepreneurs over the age of 50 have is their time. If you waste a dollar, you can make it back the next day. But if you waste an hour, you’re never going to get it back.” For Ujueta, the surprise was how long it took to get her bakery up and running. “We ran out of money and had to get a partner,” she said. “We bought equipment and basically had to build the place from the ground up. We started July of 2004 on the construction and finally opened on June 5, 2005, after paying rent for 11 months.” For all his preparation, Challgren and his wife and partner Margaret were surprised that their cash-flow model wasn’t as accurate as they had hoped. “It was costing a little more than I had planned on spending,” he said. “Now we have a handle on it. We learned it the hard way.” Challgren has found that he enjoys being his own boss and working with customers. “I don’t have anybody saying, ‘Hurry up; do this over here now.’ I have time to talk to people,” he said. “I just love that about the business.” Though launching a business usually requires incredible work and sacrifice, the rewards can be as great or greater. Those rewards include a sense of accomplishment and well being, said Morland. “You truly have the ability to control your own destiny — from a workplace and financial standpoint,” he said. “That, in my mind, is the greatest benefit. The feelings of self worth that derive from that are really important to those approaching retirement.” Jeffrey Steele is a freelance writer based in Chicago.
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