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Older vs. Younger Entrepreneurs - Who Is More Effective?

11 Oct 2022   author: Boruya

A typical image of an entrepreneur in the present day's common view is a young founder running a startup, or an IT specialist who works remotely. Meanwhile, according to some manamgement research, the "silver economy", that is, one created by people aged 50 years and above, the economy amounts to 20 trillion USD globally (2020), and in Russia it comprises at least 5 to 7 trillion rubles.

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Assessing the potential of the older generation acting as businessmen, various organizations note a number of advantages imminent to this age group. For example, a British The Prince's Initiative for Mature Enterprise (PRIME) claims that 70% of small businesses organized by people over 50 were in operation for at least five years. For startups organized by younger entrepreneurs, this portion is only 28%. According to the results of the stufy implemented by Kauffman Foundation, the probability of economic efficiency in a startup organized by a person over 55 is approximately twice as much as that of businessmen in the 20-34 years group. According to LinkedIn, projects founded by people in their 55 + are also two times more likely to succeed as compared to projects started by people aged 20-34.

In February 2019, experts from the financial holding research institute JPMorgan Chase published outcomes of an up-to-date study for small businesses. Its main goal was to identify the relationship between the financial performance of the company and gender and age of its founders. The experts concluded that companies with older founders (over 55 years) have the highest survival rate, that is, they are the least likely to close. A typical firm founded by a 30-year-old entrepreneur usually leaves the market within the next five years with a probability of 11.1%. If the founder is 60 years old, this probability goes down to 8.2%.

Russia is still at the bottom of the list of countries in terms of the share of "50 plus" people in the total number of entrepreneurs: according to various surveys, it is only 3-6%.

Maturity and age are perceived by Russians as a new level of freedom, but a small percentage of the older generation would open their own business. Obviously, the cultural perceptions play a role, as people believe that "it is too late to learn new things" and "it is already time to relax in retirement". Most business school graduates are far from their fifties.

It is skepticism among the older generation that stops potential older entrepreneurs, rather than lack of knowledge that creates significant barriers for younger people. A majority of the businessmen who said they would not have started a new business again if they knew what awaited them, according to our portal, were in the pre-retirement age groups: 46% among people of 50-55 years, against 16% among respondents under the age of 30.

The main reasons for skepticism and disappointment, according to respondents are "administrative barriers, corruption, lack of stability and transparency of business conditions."

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