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What to Know About ‘Encore Entrepreneurs,’ Who Own Half of U.S. Small Businesses
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Small businesses account for 44% of U.S. economic activity, according to the U.S. Small Business Association (SBA).
And a new survey from SCORE, a nationwide network of volunteer small business mentors, finds that while people 55 and older make up 21% of the U.S. population, these “encore entrepreneurs” own 50.9% of small businesses.
How ‘encore entrepreneurs’ use their businesses as income
About 1 in 3 (30.9%) encore entrepreneurs say their business isn’t their primary source of income, nor do they have plans to hire employees in the next 12 months.
Another 24% of these entrepreneurs indicate their business is their primary source of income and they work as an independent contractor or 1099 worker, while 24.2% also say it’s their primary source of income but they don’t work as an independent contractor or 1099 worker. Neither of these entrepreneur groups plans to hire employees in the next year.
Lastly, about 1 in 5 (20.9%) are considered early-stage potential employers, meaning they’ve been in business for one year or less and have plans to hire employees in the next 12 months.
Encore entrepreneurs mainly start businesses to pursue a passion
Of the entrepreneurs 55 and older, many express leaving their previous careers to launch businesses for the first time. Here are the various reasons cited:
- Following a passion (61.2%)
- Be their own boss (46.8%)
- See an opportunity in the marketplace (43.6%)
- Want to contribute to their community/society (35.2%)
- Want to be financially independent (33.9%)
- Desire for work-life balance/flexibility (33.3%)
- Was unemployed or underemployed at their previous job (21.3%)
- Need to supplement their income (17.7%)
- Trouble showcasing their skills with regular employers (15.2%)
- More financially stable to be able to start a business (12.5%)
- Have more available time (11.2%)
- Facing job discrimination (9.7%)
Entrepreneurs in the 55-plus set are less likely than younger entrepreneurs to be motivated by achieving a work-life balance.
These small biz owners are less likely to look for financial help
These older small business owners don’t feel supported by the government or their community. Here’s a breakdown:
- 71.8% don’t feel supported by their local government
- 65.5% don’t feel supported by their state
- More than half don’t feel supported by their community or the federal government
Older entrepreneurs are less likely than younger ones to rack up debt or seek financial help. But when they do ask, they’re 62% more likely to receive non-government forms of aid and 20% to 46% more likely to be approved for federal and state financial assistance, such as Paycheck Protection Program (PPP) loans and unemployment insurance.
Older entrepreneurs are also more inclined to bootstrap. These small business owners tap into their retirement savings 52.3% more than younger entrepreneurs. In turn, they rely less on their savings, credit cards and loans from family or friends.
Methodology: In February 2021, Herndon, Va.-based SCORE surveyed 3,270 small business owners, 2,918 of whom currently own a business. While the SCORE survey also analyzed data for immigrant and veteran entrepreneurs, we focused on the “encore entrepreneurs” 55 and older.