Encore entrepreneurs’ earnings exceed their expectations, but what is their secret to success?

Starting your own business is the American Dream. But when is the ‘right’ time in life to take the leap? In recent years, there has been an increase in encore entrepreneurs, entrepreneurs over the age of 50, who are starting their own businesses. According to the Kauffman Foundation, the 55 to 64-year-old age group accounted for 26% of new entrepreneurs in 2018.

In the 2021 Hiscox Encore Entrepreneur Report, we explore the numerous factors that influence an individual’s decision to start a business later in life and the factors that contribute towards a higher rate of success. Our survey of 400 US small business owners who started their first business aged 50 and over reveals what it takes to become an encore entrepreneur.

Why encore entrepreneurs take the leap

It is never too late to pursue your dreams, and our survey found that the primary driver for encore entrepreneurs starting their businesses was wanting to pursue a personal passion (24%). Money was also a key motivation, with 50% of respondents aiming to earn more money, become financially independent or were unemployed with no income.

Taking it easy isn’t a part of the plan, as many encore entrepreneurs increasingly commit more time to the business as they get older. Those who are between 50 and 55-years-old worked an average of 43 hours a week, while those aged 56 to 61 put in 46 hours a week, and 62 to 67-year-olds were on the job 47 hours a week.

Surpassing the advantages of more experience, resource and connections, respondents noted that the biggest advantage of starting a business at this stage in life was having more confidence (43%).

Reality versus expectations

Forty-five percent of respondents expected to earn more income compared to the salaries at their last full-time jobs, and 68% went on to do just that. For those respondents, the jump in income didn’t happen overnight, as it took an average of two years to earn the same or more income.

The data indicates that encore entrepreneurs are dedicated to achieving their goals. Among respondents who started their business primarily to make more money or for greater financial independence, 73% were successful in making more money than they did previously.

As these encore entrepreneurs began their new ventures, there were certain skills they say they lacked, which would have helped them run their businesses. Thirty-five percent of respondents would have liked more marketing experience, and 33% wanted more knowledge of e-commerce fundamentals.

The impact of pandemic

Encore entrepreneurs did not escape the hardship faced by many businesses as a result of the pandemic, with the vast majority (71%) of respondents suffering a major or moderate impact. If there were to be another economic shutdown in 2021, 40% don’t think their business would survive. The impact of Covid-19 will also be felt far beyond the lockdowns, as 31% of respondents report that they will retire later than planned due to the pandemic. There is, however, a silver lining. Sixty-three percent of respondents think it is likely that more people aged 50+ will shift from full-time employment to starting their own business as a result of the pandemic.

Given Covid-19’s impact on the economy, how likely or unlikely will people age 50 and over shift from full-time employment to starting their own business?

Protecting what you love

It is clear that for many encore entrepreneurs, their business is much more meaningful than just a way to make a living. Yet there is a lack of fundamental business protection among respondents, with 42% reporting that they do not have business insurance. Among those respondents, 26% plan on getting insurance to protect what they’ve worked so hard to build.

The content is provided for general informational purposes and is not intended to and does not constitute business or legal advice to any particular person or entity.