Bill Gates was 21 when he and Paul Allen registered Microsoft. Steve Jobs was 22 when he and Steve Wozniak started Apple. Mark Zuckerberg started Facebook in his Harvard dorm.
The biographies of these successful tech billionaires in their twenties helped cement the perception that entrepreneurship is a game of young people.
Not true. Such stories are the exception rather than the norm.
Starting young can have obvious advantages. On the one hand, it gives you a lot more time to fail multiple times than most entrepreneurs do before they put everything in place and succeed.
But overall, research suggests, older age is associated with higher levels of entrepreneurial success.
This is an important political point for governments who want people to keep working (and paying taxes) for longer, even if job prospects for job seekers decline dramatically from around age 45.
Rather than just investing money in ‘out of the box’ programs or employer grants to hire older workers, more should be invested in programs to support the population with the best chance of starting up successfully. new businesses.
Growing mature business
My research with Bronwyn Eager (University of Tasmania) and Saskia De Klerk (University of Sunshine Coast) suggests that mature entrepreneurship – after 50 – is growing faster than among any other age group in Australia.
Mature entrepreneurs run about a third of all businesses that are less than three years old. (In total, mature entrepreneurs have started around 380,000 businesses with revenues of around AU $ 12 billion per year.)
Young entrepreneurs have certain advantages. As a group, they are healthier and tend to have fewer family obligations. They may be less averse to risk, often because they have less to lose. They can also benefit from the positive perceptions others have of them as “young”.
But mature entrepreneurs have three key advantages: human capital, social capital, and financial capital.
Our research consisted of surveying over 1,000 mature entrepreneurs and correlating the results with other studies of entrepreneurs. Our results indicate that older entrepreneurs have accumulated work and life experience, knowledge and skills, social networks and resources that better prepare them for success. They tend to have better social skills and are better able to regulate their emotions than younger people.
They have a lower tolerance for risk than young entrepreneurs, but this is offset by other factors, such as confidence in their abilities and experience. Their fear of failure is therefore less than that of their younger counterparts.
The numbers are with them
Our research supports previous studies that found no evidence to suggest that young entrepreneurs are more likely to be successful than middle-aged ones.
Professor Pierre Azoulay of the MIT Sloan School of Management and his colleagues, for example, analyzed data on 2.7 million founders of American companies between 2007 and 2014 who continued to employ at least one person. The average age at creation was 41 years old. For the fastest growing “1 in 1,000” firms, the average age was 45 years.
The authors conclude that “all the evidence indicates that founders do particularly well when starting businesses at middle age or beyond, while young founders appear to be disadvantaged.”
Indeed, they found that the “batting average” for building successful businesses increased dramatically with age. A 50-year-old founder was 1.8 times more likely to achieve “top growth” than a 30-year-old founder. Those in their early twenties had the lowest probability of success.
How the government can help
Entrepreneurship can therefore be a viable alternative to unemployment among the elderly.
However, there is compelling evidence that aspiring middle-aged entrepreneurs need specialized government support and incentives, both to start their businesses and to grow their businesses.
Government initiatives such as the Entrepreneur Program (formerly the Entrepreneurship Infrastructure Program) and Entrepreneur Enablers, for example, could be better designed to accommodate the specific needs of mature entrepreneurs.
Such support will improve both the success of these enterprises and the employment prospects for young and old alike.
This article by Alex Maritz, professor of entrepreneurship, La Trobe Business School, La Trobe University, is republished from The Conversation under a Creative Commons license. Read the original article.