Over 50s start-ups: 10 steps to building your business
There’s no denying it. When most of us hear the words "start-up company" we automatically assume that it's a young person's game. But according to new figures from entrepreneurs' platform, Smarta, that is no longer the case - one in six new businesses started in the UK is set up by someone over the age of 50.
For many older workers, self-employment offers flexibility. For a large number of over-50s, this type of work provides an opportunity to wind down their career, while those made redundant find that working for themselves can also be a survival strategy.
"Since 2008 and the economic crash, we have seen an exceptionally high growth of over-50s going it alone and starting their own businesses," says Nicky Templeton of the Prince's Initiative for Mature Enterprise (Prime).
"Older people face age discrimination from employers and have a higher chance of being long-term unemployed, so enterprise presents an opportunity for them to get back on their feet and escape the agony of unemployment."
What's more, years of collected experience and expertise means that this group of start-up entrepreneurs is more likely to succeed. Figures from Prime show that over 70% of businesses last more than five years, compared with 28% for younger entrepreneurs.
Figures from the Cranfield School of Management also show that many of the owner-managers of the UK's fastest growing businesses are 50 years old and above, with revenues and job creation growing at a phenomenal rate, faster than the UK economy.
But what is it about this age group that makes them more successful than their younger competitors?
"Older workers have a huge amount to offer any workforce," says Dr Ros Altmann, the government's Business Champion for Older Workers.
"They generally have unrivalled life and work experience and often boast a broad range of skills. Of course, there can be unique challenges faced by older workers – particularly in manual or strenuous jobs – but there is no reason why a person in their 50s or 60s cannot retrain to take on a different role with their existing employer, cut down their working hours, or even opt for a complete career change."
According to research from think-tank Reform, one in 16 of those aged 46 to 65 hopes to embark upon a new business venture rather than just retire. And age certainly is no barrier to success. Take Ray Kroc, for instance. He was 52 and suffering from diabetes when he opened a hamburger outlet in San Bernadino, California. It's better known today as McDonald's.
How to get started
If you want to go it on your own and be your own boss, there are steps you can take to get started on the right foot.
1. Tap your network
A lifetime's worth of accumulated friends and acquaintances are essential to get a business off the ground. Many cities have business incubators, which provide start-up companies with affordable office space and networking services.
Regus (regus.co.uk), for instance, offers everything from short-term hot desks and meeting rooms to more long-term fully furnished offices at locations across the UK for as little as £20 a month. In Brighton, The Skiff - a not-for-profit co-working community offers more of the same.
Across the regions, why not see if there is a regular business networking event run by a regional branch of the best of organisation. The Best of Bury St Edmunds (thebestof.co.uk/local/bury-st-edmunds), for example, hosts monthly coffee mornings, attended by prestige businesses across the Suffolk town.
Get business cards printed for free online with Vistaprint, get out to networking events in your area and make sure you take your business cards wherever you go – you can meet interesting and potentially useful people anywhere.
2. Don’t be afraid to ask for help
Fortunately, when it comes to starting your own business, there's plenty of help and advice out there.
Government-backed advice services around the UK will help you with everything from creating a business plan to finding finance and recruiting staff.
So, depending on where you live, the following websites are a good first port of call. For those in England, visit gov.uk; for Wales, go to business.wales.gov.uk; for Scotland, bgateway.com; and visit investni.com/start-a-business if you live in Northern Ireland.
3. Be realistic
Just because you don't have a boss, don't assume you'll get to take long lunches and go home early. Be prepared to work long hours.
The good news is that while you no longer have small children at home, you will be better able to concentrate on your business without struggling to "do it all". However, while age can reduce your family obligations, your health can be an obstacle. Consider if you can physically keep up with the demands before you part with any cash.
4. Get your hands on some cash
One of the greatest barriers to starting a business is coming up with the start-up capital. Fortunately, many "olderpreneurs" have their own capital, while just 13% need to take out bank loans to finance their business. And those who do turn to the banks are generally seen as a safer bet than younger loan-seekers.
5. Set yourself up properly
If you decide to go it on your own, there are three ways to structure your business. Registering as a sole trader is the simplest way to become self-employed as it does not involve registration fees, and the accounting is fairly straightforward. The downside is that the tax position may not be as advantageous as in other forms of self-employment, and you are personally liable for any costs that your business runs up.
Or you could become a limited company, which keeps your business separate from your personal affairs. However, accounting is more complicated and you need to comply with HMRC requirements.
That said, as you have the ability to pay yourself a low salary and the rest of the money in dividends, it can be the most advantageous in terms of tax. This will also ensure that you do not lose your entitlement to the state pension.
Alternatively, you can opt for a partnership, where two or more people want to own a business together. However, it is important to remember that with this option, you become jointly liable for any debts.
6. Cover your back
According to Smarta, insurance is one of the most sensible things you can buy when setting up a business. What's more, some of it is compulsory. It ranges from public liability insurance to protect you if a client falls over in the office to contents insurance, which covers you if your stock is damaged. Talk to specialists to ensure you're covered and operating within the law.
Bear in mind licensing laws. There are many licences that apply to different types of businesses whether you are showing a film, selling alcohol or playing music. You may not need any licences but it pays to check in advance and factor this into your business plan.
7. Don’t forget to tell the taxman
If you start to work for yourself, you must register with the HMRC Helpline for the Newly Self Employed on 0300 200 3504 by the end of the third calendar month after you started, or you face an automatic £100 penalty.
For more information, visit hmrc.gov.uk/selfemployed.
8. Know when to pay for specialist help
Entrepreneurs who stay successful tend to know their strengths and weaknesses – and West Yorkshire- based Rod Boyes is no different. Boyes, 52, who founded Pinegrove Leather (pinegroveleather.co.uk) with his wife in 2012, found marketing to be his biggest challenge.
He says that while he has been successfully selling his hand-crafted leather products on online market places such as Amazon.co.uk, Notonthehighstreet.com and Etsy.com, he felt that he needed marketing support.
"I soon realised that this wasn't my strong suit but wasn't too proud to admit it," explains Boyes. "Hiring someone to give me the extra support I needed meant that I could concentrate on other parts of the business."
While in the early days, hiring an accountant may seem extravagant, getting professional advice will ensure you run your business in the most tax-efficient way.
Use the find-an-accountant service at icaew.com to source one in your area. But don't leave it to the last minute, as many firms will prioritise existing clients at busy times of the year.
Good book-keeping is crucial to make your business profitable and there are many high-tech options available. For instance, for around £80 a month, online accountants such as Boox.co.uk will provide you with software that allows you to keep track of your spending, invoices and tax liabilities as part of its paid-for service.
9. Prepare for emergencies
When going it on your own, make sure your day-to- day expenses are covered in the event of an emergency.
Income protection insurance is designed to provide a tax-free income should you be unable to work because of an accident or illness. Critical illness cover, serious illness cover and life cover are also sensible options to look at.
However, some over-50 entrepreneurs may be tempted to overlook this type of protection due to their age.
"Cost may be prohibitive due to age and possibly existing conditions, however it is because the risk is greater with age that protection is so important," says Tom Baigrie of protection specialist LifeSearch.
10. Embrace technology
One thing essential for setting up any business in the 21st century is an understanding of how to use technology - something some older people may struggle to embrace. Check out Getting British Business Online (gbbo.co.uk) where you can set up a website and personalised business email address as well as access technical support for free.
Sharpen your IT skills with computer training courses from Age UK. To find a programme near you, visit ageuk.org.uk/work-and-learning/technology-and-internet/computer-training-courses or call 0800 169 6565.
Income protection insurance
If you can’t work in the event of sickness or illness, income protection insurance aims to give you an income, with the amount of income set by you up to 75% of your gross (before tax) income with the premiums varying by how much of your salary you want to cover, as well as your age and health and when you want to start receive any payouts. Any payouts from income protection insurance are tax-free and usually continue until you recover, reach your selected pension age or the period of cover specified in the policy comes to an end. Income protection insurance does not cover redundancy but you can buy it as a bolt-on.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.