Paul Hardman, director of corporate and commercial at Bristol based law firm Gregg Latchams explores the rising trend of the ‘olderpreneur’ and the South West business owners that are successfully running their own companies at the age of 50+
Age discrimination is not a problem if you are running your own company.
So, it is perhaps unsurprising that so many baby boomers are launching their own enterprises later in life. We’ve seen a significant rise in what we might term the ‘olderpreneur’, people of retirement age who have decided to take over or start-up businesses. People hitting a dead end at work in their 50s are choosing to take control and pursue roles that they have always wanted to do.
For while people nearing or in retirement may not enjoy such golden employment prospects, what they do often have is a wealth of experience and the financial clout to start their own companies or re-train themselves in a new specialism.
This has been aided by the relaxation of pension rules which has made it easier to access retirement funds from 55 onwards.
For many people, for whom retirement is likely to last well over two decades, an extra income stream may also be appealing.
Self-employment in the UK rose from 3.8m in 2008 to 4.6m by the end of 2015, according to the Office for National Statistics.
The over-50s make up 43 per cent of those who start their own businesses but account for less than a third of employees on workplace payrolls. The number of self-employed people aged 65 and over more than doubled between 2012 and 2017.
We’ve seen more people using transfer valuations on final-salary schemes through which it is possible to access significant lump sums or borrow against the value of a pension to fund new businesses.
Other ‘olderpreneurs’ may use redundancy pay outs, inheritance money, leverage of assets or simply savings amassed over many years.
But it is a high-risk option to start your own business at any age and incredibly impressive to opt to take on such responsibility while most of your peers are leaving work and putting their feet up.
Our commercial team at Gregg Latchams really enjoys working on these kinds of deals as usually the individuals involved are very interesting and experienced people with great ideas.
We recently helped on a management buy-in of Avon Magnetics, based in Christchurch, by 62-year-old John Anderson which was completed on 1st March 2019.
John was running a business which was relocated overseas leaving him jobless in his late 50s.
Using his extensive experience in electro mechanical engineering, he initially set up a consultancy advising other businesses but did not enjoy it so began applying for jobs.
He repeatedly got the final interview stage before being told that another candidate was “at a better stage in their career”, implying he was just too old, or that he was “overqualified”.
But he did not feel ready to retire.
As a consultant he started working with Bill Wickens, director of Avon Magnetics, who agreed to sell one of the leading AS9100 Rev D companies in its field to him, keeping all the existing staff and the company’s facility in Christchurch.
John said, “I thought, ‘Do I start vegetating? Do I just garden in summer and paint house in winter and be miserable?’ Clearly not.
“In June last year, I decided to go for it and met the owner of the business. We have collectively been working to manage the buy-in and acquisition of this since then and completed the process on March 1st.
“A lot of people think I’m nuts taking on 60 employees and the responsibility when most people are retiring but I don’t feel my age.
“I’ve spoken to lots of people about it and I think I’m unusual but close friends say they admire what I’ve done.
“If I had given up work a few years ago, I could have survived reasonably well but the mental and interaction element was lacking. I missed the buzz and stimulation when I was no longer working.”
He added: “People seem to forget that if you’re over the age of 50 you’ve got a heck of a lot to give to a business. I’ve been through two recessions; a lot of people haven’t experienced that. The late 1990s and early 2000s was very rocky, I had to learn about how to manage all the finances.”
Bristol-based Phil Pope also carried out a management buy-out of Brissco (Equipment) Ltd with two associates in 2017, aged 63.
He had worked in large corporates for most of his career before taking redundancy in 2005. He started working with some former employees at Westward Plastics in Bristol which fell victim to the economic downturn of 2009 and went into administration in 2011.
Phil was in his late 50s, keen to work and was convinced this was a viable business that should be saved, protecting its 19 employees.
He approached neighbouring screen printing business, Brissco (Equipment) Ltd, a family owned signs & graphics business established in 1948, whose owners were looking to retire and agreed a deal by which they bought Westward Plastics out of receivership and agreed to give him the opportunity to purchase the resulting larger company.
Alongside two colleagues, through a management buy-out, he bought the former owners out in 2017 and has been running Brissco (Equipment) Ltd as managing director since.
“The business is doing really well,” said Phil. “We have a very specialised product with loyal customers and contracts with some very big companies.
“Most of my life I worked for large corporate companies, in good management positions, which were reasonably well paid and enabled me to bring up my family and go on nice holidays without having the day to day responsibilities business owners have”.
“I wasn’t planning to own my own company in the future but in the circumstances, it felt like the right thing to do. I had the means as I was able to use the money I had got through redundancy and some other savings.
“When I took redundancy I had six months off when I wasn’t working and it gave me an insight into what retirement would be like and how I missed work and the interaction”.
“I am extremely lucky my co-directors are very kind to me and allow me some flexibility in my working hours and time off, it is sort of having the best of both worlds”.
“But I did have to take some big risks to get myself to this position.”
Kim Jones who runs hgkc ltd which works with a wide range of businesses to help them formulate and achieve their strategic goals, has termed this phenomenon “later stage ambition”.
She is seeing a steady rise in people aged 45 to 60 giving up their corporate jobs to take over existing businesses – often through management buy-ins or buy-outs – and reinventing or growing them in new directions.
She believes the skills, knowledge and expertise required to take a business in a new direction and scale it up successfully are in abundance in the over 40s.
“There is a definite trend in people feeling they are at the end of their careers or facing retirement deciding they are not done yet,” said Kim.
“Professionals at the end of their career have a wealth of experience so are among the best placed to successfully lead businesses. We see it a lot with companies that have been around for a good 10 years or so and are maturing or reaching their next cycle so need some new direction.
“This is where someone with the right skills and ideas can make a huge difference bringing in new products, exploring new markets and reinventing the business to ensure success for years to come.
“Business owners that have been around for a long time know how to do the basics, in fact, they are really good at it. This means they can handle the new innovative stuff and they are likely to have the drive and money to do it.”