By Lily Leung
The Orange County Register
In the depths of the Great Recession, Kathleen Schneider saw a nest egg she had built over decades shrink by more than 20 percent.
The Fullerton resident’s investment portfolio began to rebound last year, but the sharp decline taught her the need to diversify.
So Schneider, 57, recently took out a portion of her retirement savings and bought an Instant Imprints franchise, which makes promotional items for businesses. Her shop opened in late November.
The chain’s franchisees typically invest a total of $160,982 to $297,898 and pay an ongoing royalty fee of 6 percent, according to franchising data from Entrepreneur Media.
“So, now I’ve got control of whether I succeed or not,” said Schneider, who also owns a separate IT business-consulting firm. Her financial future is “more tied to my being successful in the business” than just the financial markets.
It is increasingly more common to see baby boomers jump into self-employment.
More than 23 percent of entrepreneurs who started companies in 2012, the latest year for which data are available, are ages 55 to 64. That’s a jump from 14 percent in 1996, according to an analysis by the Ewing Marion Kauffman Foundation, a Kansas City-based nonprofit that tracks startup activity.
Motivations to kick off a business instead of finding a retirement getaway include replenishing retirement accounts, starting second careers or working for oneself. But those with dreams of starting new ventures in their 50s and 60s face challenges that go beyond the usual ones facing entrepreneurs.
50/50 CHANCE OF FAILURE
There’s about a 50/50 chance that a U.S. business will make it past the five-year mark, based on 2013 Census Bureau data. It’s unclear whether the odds of success are better or worse for boomer-led startups. What is clear is that recovery from a failure could be more difficult.
The business “entry and exit are much closer together,” said Michele Markey, vice president of the Kauffman Foundation’s FastTrac program, which trains entrepreneurs around the country. “If you take a boomer that’s 55, they don’t have 20 to 30 years to recover (from) an up-and-down business or business mistakes.”
Acknowledging that, the Kauffman Foundation and AARP last year launched a program for baby boomers who want to explore entrepreneurship.
Irvine is among three cities piloting a 10-week course, Kauffman FastTrac New Venture for the Boomer Entrepreneur.
Miami and New York City are the other locations. Organizers chose Irvine partly because of its proximity to other big population centers in Southern California, including San Diego and the Inland Empire, said Larry Kutcher, an Orange County business owner leading the local course.
Set to start Feb. 24, the local program will cover topics such as coming up with business plans, refining elevator pitches and learning the value of networking. One likely discussion topic is franchising, which is a popular model for older entrepreneurs because it offers a company’s established brand and support system.
YOUR OWN SHOW
That’s what appealed to Schneider, who opened the promotional-items store in Fullerton.