Don’t give up on that great business idea, no matter how old you are. People who start businesses in their 40s, 50s and even into their 60s typically succeed as well if not better than younger entrepreneurs, extensive research reveals.
A new study finds entrepreneurs who begin while in their 50s succeed at roughly the same rate as people starting up in their 20s. Specifically, an entrepreneur starting at age 53 is as likely to be as successful, over time, as one launching a company at age 29, said study leader Hao Zhao, PhD, an associate professor of management at the Lally School of Management at Rensselaer Polytechnic Institute. The findings hold up across genders.
“Older women were more successful than younger women,” Zhao told CO—.
Although many famous entrepreneurs founded their companies in their early 20s, the chances of launching a successful business gradually decline until around age 41, when the odds begin to improve again, Zhao said. This could be due to any number of challenges for people in early mid-life, from raising kids to caring for elderly parents, he said.
The research, involving a review of 102 previous studies that each looked at an average of 600 entrepreneurs, is published in the January 2021 issue of the Journal of Business Venturing. It suggests younger entrepreneurs may be bolder and more tech savvy, while people in their 50s often start with a leg up on wisdom, financial capital and business connections—a view that could help overturn some stereotypes about aging and entrepreneurship that are particularly poignant today.
"The United States has an increasing population of older adults that have skills and knowledge valuable to society,” Zhao pointed out. “This study helps to illustrate their strengths."
Our skewed perceptions
Some experts have theorized that youth often comes with better cognitive skills, greater awareness of current technologies and trends, and less resistance to disruptive change that can be crucial to successful innovation. While that may all be true, such advantages rarely seem to outweigh experience.
In fact, the average age of founders at what evolve into the fastest-growing new ventures—the top 0.1% based on employment growth—is 45, according to comprehensive analysis of 2.7 million company founders by researchers at the MIT Sloan School of Management and other business schools. Successful IPOs and acquisitions are also most likely to result when founders launch the businesses while in their mid-40s.
But 45 is not some magical number. Because the majority of new entrepreneurs happen to be around that age, the average age doesn’t tell the whole story.
The number of years that one spends in the same industry as the startup was predictive of that company’s future performance.
J. Daniel Kim, PhD, assistant professor of management, University of Pennsylvania
So the researchers also compared success as a function of age. By that measure, the typical 50-year-old founder is 1.8 times more likely to achieve high growth than the typical 30-year-old founder, and those who start in their early 20s are the least likely to build high-growth companies—succeeding only extremely rarely.
“These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs,” the researchers write. “Successful entrepreneurs are middle-aged, not young. We find no evidence to suggest that founders in their 20s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged.”
Leveraging experience
Relevant experience clearly matters to startup success.
“The number of years that one spends in the same industry as the startup was predictive of that company’s future performance,” said study team member J. Daniel Kim, PhD, an assistant professor of management at the University of Pennsylvania’s Wharton School.
The wild success and ubiquitous news coverage of a handful of young founders — think Zuckerberg, Jobs and Gates — skews our views of the typical ages of successful entrepreneurs, Kim and his colleagues conclude. Even so, their research does not suggest a good idea should wait.
“Zuckerberg founding a company at age 19 was the right time to do that,” Kim said. “But we’re trying to make this general point that this link between entrepreneurship and age is a really strong one.”
While this study did not analyze gender differences, the benefits of age almost surely accrue for women, too. “After 50 can be a great time in life for women to launch companies,” writes Kerry Hannon, author of the book “Never Too Old to Get Rich: The Entrepreneur’s Guide to Starting a Business Mid-Life.” In a Forbes article, Hannon interviews several experts who agree and even note that older women typically have advantages over men in their ability to make more and more diverse connections with others.
Other research has found some precise ways in which experience can help. In a 2018 survey of more than 2,000 businesses by the Kauffman Foundation, 32% of startup owners under age 45 said getting a business license was difficult, a process that confounded only 23% of older entrepreneurs. Similarly, the younger set struggled more with loan applications.
The upshot, according to Zhao:
“Despite the stereotype, 50s and 60s are actually a good time to start new businesses,” he said. “Older people have many advantages, such as a greater amount of financial capital, social connection, work and management experience, life wisdom, and lighter family obligations, all of which can offset the gradual decline of risk propensity, memory, and hands-on technical skills. They are as likely to be successful as those in the 20s and early 30s, as long as they carefully utilize those strengths—such as by picking a business and industry that they are familiar with.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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