How old is too old to start a business?

aat comment

A growing number of people – of all ages – are starting (or thinking about starting) their own business. Some will stay tiny; others will stick around for a few years; many will flop; a lucky few will thrive. So which age group has the best success rate and can you be too old to start a business?

Young bucks – under 25

Entrepreneurship has never been more “in” – a stroll around east London’s Shoreditch illustrates how hip entrepreneurship has become. More than 55% of all young people say they want to set up their own business at some point.

Between 2006 and 2013, the number of young entrepreneurs – i.e. company founders under 25 years of age – has shot up. Around 80,000 company founders are still at university, research from Santander shows, and a quarter of these plan to turn their businesses into a career when they graduate.

Reasons for starting a business differ enormously: sometimes it’s pure necessity – becoming your own boss post-university is the only option. Others are motivated to start a company through opportunity; some, such as Ian Hogarth, founder of the awesome music site Songkick, spot the chance to create a new market.

Mid-lifers – 25 to 45

In 2014, one in five working-age individuals in the UK were running their own business, trying to start a business or intended to start a business within the next three years.

And the classic profile of an entrepreneur today is a 39-year-old man, according to the Global Entrepreneurship Monitor UK 2014 Report.

“If you accept that enthusiasm and energy declines with age, but experience and expertise also increases with age, then this makes sense: 39 is where these two trends meet,” explains Professor Jonathan Levie of the Hunter Centre for Entrepreneurship at the University of Strathclyde.

It’s also the classic time for a mid-life crisis, which often results in a career change.

“The likelihood of people actually starting once they have begun trying to start their business rises with age,” Levie continues. “This is probably because younger people don’t have the experience to research a business idea in advance and they have less to lose personally if it does not work out.”

But you’re still in with a shout if you’re at the younger end of the mid-lifers. Between 2006 and 2013, according to DueDil and Enterprise Nation, the number of company founders aged under 35 increased by 70%, from 145,104 to 247,049.

Mature entrepreneurs – 45 and over

Even if you’re into middle age and beyond, you’re still in the game. The biggest growth in entrepreneurship in the last year has come from the middle-aged. It’s also the group with the greatest chance of success. Experience does matter, after all.

Males aged between 50 and 64 were the largest group to take the first steps towards running their own business in 2014, with an “entrepreneurial activity rate” of 9.8% (compared to 4% of women in the same age bracket).

(“Entrepreneurial activity rate” refers to the “total early-stage entrepreneurial activity” rate – or TEA rate. This is defined as a combination of nascent entrepreneurs – individuals committing some sort of resource to start a business – as well as new business-owners, whose businesses have been paying an income for more than three, but not more than 42, months.)

Professor Mark Hart of Aston Business School says: “This age group has historically had a TEA rate significantly lower than for those in the younger age groups, but the recent recession seems to have changed that long-term trend.

“One possible interpretation is that older men find it difficult to get back into the labour market after the recession, and some are now looking to start their own business.”

There is a correlation between age and success, research by Age UK shows. More than 70% of businesses started by over 55-year-olds last more than five years, compared to 28% among younger entrepreneurs.

Alastair Clegg, chief executive of the Prince’s Initiative for Mature Enterprise (PRIME), a national charity that supports business creation for the over-50s, says: “The over-50s have the skills, experience and dedication that naturally lend themselves to enterprise. Businesses stated by older people help benefit the economy, provide jobs and work for other people and, more importantly, help keep older people in the workforce.”

After retirement age, however, new business activity drops off sharply. Only around 2% of people aged over 64 in the UK are actively trying to start a business or running their own new business, compared to over 6% of those aged 55 to 64, Hunter Centre research shows.

Key takeaway – you’re never too old…

Regardless of age, the key to success is having a good idea and being dedicated to making it work. That’s true, whether you’re fresh out of university or recently retired.

“If you have a commercially viable idea, it’s never too late to set up your own business,” says Claire McNeil, project manager at AIM Start Ups, a delivery partner of the government-backed Start-Up Loans scheme. “More than 78% of our successful applicants are over 30 years old, and 16% are over 50. You are never too old to start something new.”

Want to learn more about finance skills to run your own business? Explore our  business skills qualifications and our bookkeeping and computerised accounting skills qualifications.  

Jason Hesse is a business journalist specialising in entrepreneurship and small business. His work has appeared in The Times, The Daily Telegraph, Forbes and Real Business among other publications.

Jason Hesse is a journalist who specialises in writing about entrepreneurship and small business.

Related articles