By James T. Madore
Baby boomers are starting businesses at a higher rate than younger generations celebrated for producing entrepreneurs.
Boomers were behind nearly one-quarter of all new businesses started in the United States last year, a larger proportion than those begun by people 20 to 34 years old, according to the Ewing Marion Kauffman Foundation, a think tank in Kansas City that studies entrepreneurship. The U.S. Bureau of Labor Statistics has reported that people over age 55 are the fastest-growing group of self-employed workers.
Locally, 40 percent of the people seeking free counseling from the Small Business Development Center at Farmingdale State College and the Long Island chapter of the Service Corps of Retired Executives are baby boomers, born between 1946 and 1964.
Some want to purchase an existing company or a franchise location of a national chain. Many plan to become consultants in the industries they’ve worked in, such as finance and information technology. Another popular choice is opening a restaurant, or a retail store, selling everything from candy to clothes to gifts.
Paul B. McCain turned his longtime passion for fly-fishing into a small business a year ago when he opened a fishing supply shop in Oceanside. He said, “I’m probably putting in more hours than when I worked for someone else, but I really enjoy doing this.”
McCain launched River Bay Outfitters LLC with $20,000 from a credit line and $5,000 on a credit card. He expects his first-year sales will be about $40,000.
Other entrepreneurs have turned to loans or even raiding their retirement savings to fund their establishments, which can cost hundreds of thousands of dollars.
Starting a business isn’t for the faint of heart. The U.S. Small Business Administration estimated that more than half of all new establishments fail in the first five years.
In it for passion, paychecks
Still, there are many reasons baby boomers are striking out on their own, experts said.
Some choose to start a business after they’ve been laid off and cannot find another good-paying job, or are worried about a pink slip and want a second career to fall back on.
Others retired only to find they must supplement pension and Social Security checks because of the high cost of living in Nassau and Suffolk counties. Those having difficulty finding new jobs after being laid off are anxious about paying mortgages and children’s college tuition.
“They are looking to start something that’s recession-proof,” said Erica Chase-Gregory, acting director of the business development center at Farmingdale State. “They are asking, ‘What kind of business can I create that will help me to pay my bills?’ ”
She also said some boomers start a company to pursue a lifelong dream or as an antidote to boredom and frailty as they age. These entrepreneurs “are trying to redefine themselves,” she said.
The businesses begun by boomers typically have fewer than 100 employees. On Long Island, firms of that size accounted for 98 percent of all businesses in 2012, the most recent available census data.
“The size of the baby boomer demographic and their business startups create a real economic impact,” said Elizabeth Isele, a Virginia-based advocate and trainer for older entrepreneurs.
Unemployment would be eradicated nationwide if one out of every three micro-businesses — those with five or fewer workers — created one job, she said, citing a report from the Association for Enterprise Opportunity, a group representing micro-businesses.
“Seniors can learn to start their own businesses, it’s not rocket science,” said Isele, 72, who helped found the low-cost business training group Senior Entrepreneurship Works. “You just have to analyze the risk, move slowly forward, make decisions based on reality and never, never exceed what you can afford to lose on the business.”
That’s how McCain, the fly-fisherman, is running River Bay Outfitters.
The store caters to amateur and experienced fishermen alike with rods, reels and flies in wooden cabinets that line green walls decorated with paintings of streams and fish. It’s located in 420 square feet carved from the office of Baldwin Realty.
McCain, 61, began fly-fishing about 30 years ago but it took superstorm Sandy to turn him into an entrepreneur.
The Oct. 29, 2012 storm devastated Pancho’s Cantina, the Island Park restaurant where he’d been a manager for years. He was receiving unemployment checks when state officials suggested that he go to Farmingdale State’s business development center and learn how to start a business.
McCain said he didn’t have a lot of money, but he had the support of his family, local fishing clubs and mentors with industry experience. He hopes to turn a profit next year.
“This is a store and I want it to be profitable, but it’s also a learning center,” McCain said, adding that he enjoys teaching fly-tying to all ages.
A sweet business
Running an old-fashioned soda fountain and candy store has boosted the spirits of Joan Cohen. She opened Hope’s Land of Candy in Island Park after she lost her husband of 36 years to cancer in 2012.
“Since Alan died, it’s a different life for me,” said Cohen, 64, taking a break from making fudge. “This has become my social life.”
She admitted to being “dragged kicking and screaming into this business.” Her daughter, Hope, has always loved candy and had pleaded unsuccessfully with her parents for more than 20 years to open a candy shop. But once her father fell ill, her mother said, “I thought life is too short. If Hope wants to do this, we’re going to do it.”
Joan Cohen contacted the business development center for help in writing a business plan and applying for a $200,000 loan. Her son, Adam, found an 1897 guide to running a soda fountain.
“If we are going to make it, we have to be unique,” Joan Cohen said. “I want people to feel like they walked back a century.”
Hope’s Land, located in a strip mall anchored by an Outback Steakhouse, sells candy cigarettes, Turkish taffy, Clark bars and other sweets from bygone days. Clerks use a 1904 cash register and music comes from a player piano.
Cohen said the 2,000-square-foot store cost $400,000 to open in July and she predicted first-year sales would approach that sum.
There are 25 part-time employees, most of them high school students.
Cohen owns 62 percent of the store while her two children each own 19 percent. She said, “It’s going to take a while to be successful . . . We have to hang in there.”
Cohen started a business in an industry where her only experience had been as a soda jerk at age 15 and stints as a waitress.
Experts said many baby boomers choose to become independent consultants in the industry they’ve worked in most of their lives.
“It’s something they are familiar with,” said Barry Klein, chairman of the local chapter of the retired executives corps. “The big risk is that a lot of people are doing the same thing.”
Franchising also may be an option for boomers, if they have financial resources.
Franchising generally requires a net worth of at least $100,000 and the ability to get a bank loan, said Tom Scarda, a FranChoice Inc. consultant, based in Wantagh.
Age is often a factor for baby boomers who go into franchising. “They feel like they don’t have time to make mistakes . . . A franchise is a business with training wheels,” said Scarda, who once owned a Hawaiian smoothie franchise in Nassau County.
Sandy Quartuccio didn’t want to start a business from scratch in 2008 after being laid off from her job of nearly 30 years at the NPD Group, a market-research company in Port Washington. Two weeks earlier, she had remarried and with her new husband was supporting four children.
“I was tired of working for corporate America and wanted to work for myself,” she said. “Franchising appealed to me because they have a model for you to follow.”
Quartuccio, working with a FranChoice adviser, bought the franchise in northern Nassau and northeastern Queens for Right At Home.
Success with franchise
Omaha-based Right at Home provides companionship, feeding, hygiene, transportation and other services that allow the elderly to live independently. It has 454 franchises in nine countries.
Quartuccio’s business is headquartered in Hicksville and employs 110 full- and part-time workers caring for 85 clients per week.
Quartuccio, 57, and her husband, Phil, 59, took $100,000 from their 401(k) retirement accounts to start the business. Sales were sufficiently strong in the first 18 months that Phil quit his job as a manager for guitar-string maker D’Addario & Co. in East Farmingdale to work with his wife. The couple forecast sales would exceed $2.5 million this year.
Asked for advice about starting a company, Phil said, “You are going to work hard, but at the end of the day you will have the satisfaction of being able to say, ‘I made this.’ ”
TIPS FOR GOING INTO BUSINESS FOR YOURSELF
Opening a business late in life requires careful planning because you have less time to recover from mistakes and economic downturns. Here’s advice from experts:
1. Assess your strengths and weaknesses as a potential business owner.
2. Select the type of business that suits the marketplace, along with your goals, skills and personality.
3. Choose the type of business that isn’t hurt by recession or new technology.
4. Formulate a realistic business plan, revise it as circumstances change, have it reviewed by business experts.
5. Consider whether to purchase a franchise; a net worth of $100,000 is generally required and substantial fees may be involved.
6. Consider purchasing an existing company.
7. Understand that operating a business will likely take more time than working for someone else.
8. Obtain financing; credit cards, credit lines and loans are popular, but be careful not to take on too much debt.
9. Avoid dipping into retirement savings to fund the business.
10. Set aside money to sustain yourself and the company until it becomes profitable.
11. Keep your job, if you have one, until the business is doing well enough that you can quit.
12. Embrace technology such as using social media to reach customers and computer systems to manage inventory.
13. Plan for who will take over the company when you want to retire or step back from day-to-day involvement.
Sources: FranChoice; Long Island chapter of the Service Corps of Retired Executives; Small Business Development Center at Farmingdale State College; Senior Entrepreneurship Works