I’ve been noticing a steady shift in the mindset of people regarding what they consider their ideal “work” to be. If this were 5 or maybe 10 years ago, I would ask my colleagues what their ideal work would be like, and they would all name the corporate biggies.
Today, however, I’m noticing that more and more professionals lean towards creating their own brand, which is good. However, there’s one thing I’ve observed, and that is
There is a statistical correlation between the age you start your business and the success the business achieves. A 45 year old small business founder is 2.7 times more likely to be successful than a person who is 25 years old while starting a small business
It might be going as far as to say that the success of a startup depends on the age of the entrepreneur, but we will explore that in numbers and debunk the associated myths today.
Who knows? We might even discover new insights along the way.
Let’s dig in and find out what the best age to start a small business is.
But First, Let’s Crunch Some Numbers
Let’s begin with the some insights I discovered in a paper published by the National Bureau of Economic Research.
The researchers argue that venture capitalists and government schemes tend to favor younger entrepreneurs because they have fewer responsibilities than your typical middle-aged person.
The researchers also state that younger entrepreneurs have sharper and more active cognition and fewer distractions in life. This may predispose the younger individuals to produce more disruptive, transformative ideas.
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However, the paper also explores that younger individuals may not have the kind of liquidity required to carry an idea into the business world. Especially when compared to a middle-aged person.
Financial constraints are a big hurdle that young entrepreneurs must cross to raise the kind of capital needed to launch a business and nourish it.
Several other factors favor the middle-aged demographic when it comes to entrepreneurial success, for example:
- Experience in the niche, as this is key to understanding the tricks of the trade.
- Extensivity of the business network, as this expands only with experience and age – both of which favor older businesspeople.
- Acquisition of the right set of skills required to build a business from an idea and innovate continuously for competitiveness.
I also found some numbers from the United States Census to back up the inferences drawn in this research:
The percentage of business owners was highest amongst the demographic aged 55 and older. Trailing not far behind were people aged between 35 and 54, with the rest falling in the smallest group:
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All of that aside, Kellogg Insight has some objective observations to share with the world, especially in the technology niche.
A study was conducted by several professionals belonging to the US Census Bureau and MIT using a wide dataset and sample size to understand how age impacted the success of a tech startup.
The results are in stark contrast to the generalized but popular thinking that the youngbloods own the entrepreneurial space.
The studies indicated that the older you are, the more chance there is of your startup succeeding. They found that a high number of successful entrepreneurs were actually middle-aged.
This interactive infographic lets you see how many times more likely you are to succeed as compared to a 25-year-old by entering your own age in a box:
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The story doesn’t end there!
As I dug deeper into the correlation between age and the success of a startup, I came across research conducted by Harvard Business Review that broke it down for high-tech startups.
Interestingly enough, this research brought new considerations and insights to the table.
The researchers, in addition to considering the age and business ownership to determine their numbers, were also looking at several other real-world factors, like:
- Does businesses owned by the middle-aged people had any intentions to grow large?
- Was their firm was granted a patent?
- Whether or not they have successfully received an investment from a venture capitalist.
- Do they actually employ a high number of STEM workers?
- Location of the company – are they situated in a tech hub like Silicon Valley?
By analysing all of these variables, the researchers still arrived at the same conclusion: the age range remained in the early forties.
[Source]
Exploring further, the researchers attested the success of startups to older age because of the experience advantage. They found that a person who had greater experience in a field was a staggering 85% more likely to launch a successful startup.
[Source]
…And There are Exceptions, Of Course.
Steve Jobs.
Jeff Bezos.
Mark Zuckerberg.
Evan Spiegel.
While experience and a more robust skillset remain at the disposal of older people, the younger ones are more tech-savvy and less averse to taking risks.
This may give them an edge to explore farther and with more vigor than the safe-playing 40-somethings.
[Source]
There is a long list of people who made it big when they were young – or so it would seem on the surface. Let’s scratch it for a little bit.
Consider the case of Steve Jobs and Jeff Bezos.
Sure, they did find their companies while they were extremely young. However, it wasn’t until several years later that their firms truly hit their peak.
You guessed it right!
Apple and Amazon peaked when their founders were in their forties.
So, what do we infer from this? Two things:
- Young entrepreneurs who do have an acumen for business may succeed at converting their ideas into business
- However, it is only with experience and refinement of age that they would apply their acquired knowledge and skill to their business and see greater success
Why do venture capitalists see the younger entrepreneurs as more worthy of investing in?
It may have a lot to do with getting a “better deal” from the younger, lesser experienced entrepreneurs who are in dire need of funds to hone their ideas. This allows the venture capitalists to negotiate higher returns on their investments.
This is something an experienced person in their mid-forties may not readily agree to.
The runway available for future growth is longer if the business owner is younger which may not really matter much to VCs since they typically stay invested for no longer than 7-8 years.
5 things that successful business owners do differently than business owners who don’t
So what makes it work? What goes into an idea that turns it into a thriving, growing business?
There are five things that achievers like Jeff Bezos do differently than those who do not make the cut. These five things are:
They Dream Bigger
The fear of unfamiliar turf is what usually stops people from exploring their ideas.
The go-getters get past this fear instead of admitting defeat to something that hasn’t happened yet. Having high ambitions supported by a clear vision is what gets them to their goals.
They Polish Their Vision
The achievers know that no idea is complete in its nascent form. It needs the backing of a clear vision, values, mission, and means.
Those who succeed always stand by their beliefs and have confidence in their actions that are driven by purpose.
They Hire to Fill the Gaps
Good business people know the risks of failure that hide in the skill gaps at their organization. They recognize the drawbacks of their workforce and hire to fill the deficit.
They welcome people with diverse experiences and backgrounds for their valuable perspectives.
They Keep Great Company
It is true what they say, that you are only as good as the company you keep. The achievers surround themselves with the people they aspire to become like.
It provides them with a sustained momentum and a solid direction for growth.
They Keep a Reality Check
No matter how successful the achievers become, they maintain a touch with reality and aim to give back to society in some way.
Dreams Are Achievable When You Turn Them into Goals
“Life begins at 40.”
Pitkin had been right all this time, and we were all caught up in the race of being young to truly realize the potential that our 40s hold. With that said, there is due credit to be given to the younger demographic for the talents and capacities that they bring to the table.
So, what should be the ideal age bracket for the best small business owners?
It is best to explore entrepreneurship when you have gained enough experience and understood the ground reality of your niche to have a better shot.
According to the journey I’ve had with the various studies and research explored so far, your mid-forties seem to be the best age to start a small business that has a chance of succeeding.
However, do not let that stop you. If you are young and have an idea with the potential to make it big, I wish you all the best!
Also, remember, the VCs still favor the young!