According to the definition by the OECD, senior entrepreneurs are people who start a business after they have turned 50. Political decision makers are interested in supporting senior entrepreneurship because it is believed to help lengthen careers. Also, there is a desire to benefit from the expertise and networks of those with a long career as much and for as long as possible.
The average age of the population is rising, and in 2030, 26% of Finns will already be aged at least 65. This brings along both economic challenges and possibilities.
'It may become challenging for employers to find workforce to replace retiring employees. Likewise, the costs of health care and the pension system will increase while the dependency ratio i.e. the ratio of those outside the workforce to the working population weakens. On the other hand, consumer behaviour is also changing; pensioners may have the interest and possibilities to use, for example, tourism services in different ways than pensioners have in earlier generations,' says Teemu Kautonen, Associate Professor of Entrepreneurship at the Aalto School of Business, who has researched ageing and entrepreneurship.
Senior entrepreneurship taken on more or less by choice
Many mature people possess more expertise, networks and financial means needed in starting a business than younger entrepreneurs. Self employment is also more flexible in terms of working times and the amount of work, and may therefore be a worthwhile phase between the actual career and full-time retirement.
According to Professor Teemu Kautonen there are, on the other hand, limited possibilities for ageing employees to develop their expertise in employment because many employers are not keen to invest in training employees aged over 50. Also, when reductions are made in the workforce, the pressure is especially on mature employees. In these circumstances, setting up a business may be a more worthwhile option for an older employee than the unemployment pathway to retirement.
Younger age groups willing to invest in starting a business
Entrepreneurial activity is considerably lower among those over 50 than in younger age groups. A person aged 20-49 is twice as likely to set up a business than an entrepreneur aged over 50.
'The explanation proposed by entrepreneurship research is the willingness to invest, which is higher among young entrepreneurs, who have a longer career in front of them, and therefore more time to wait for a return on the resources they have invested.' Older founders of businesses have shorter careers in front of them, and are therefore less willing to invest in business activity. This also manifested in that a business activity of a mature new entrepreneur typically employs the person him or herself, and a few employees at the most. Over 50-year-olds set up fewer growth companies than people in younger age groups, and in that respect the benefits of senior entrepreneurship for the society are more social that economic.
'Senior entrepreneurs may also experience age discrimination; people doubt their capability to provide products and services. The support senior entrepreneurs get from family and friends is relevant. Negative attitudes and lack of support slow down the process of setting up a business, or may make a senior entrepreneur give up the idea altogether. Mentoring is appreciated especially when the mentor is an experienced person from the same age group,' says Teemu Kautonen.
Read also: OECD senior entrepreneurship background paper 2012
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