Being able to create more retirement income is one of the reasons why more of Canada’s baby boomers are starting their own small businesses.
Before they reach retirement, more than half of Canadian boomers have either launched or are considering launching a small business, according to Valley First, a division of First West Credit Union, in Langley, British Columbia, which has approximately $6.6 billion in assets under administration.
Since about a third of start-ups fail after the first year, success for boomers or anyone lies in the preparation, creating a business plan, and unearthing hidden costs and securing financing, said Kevin Smith, Valley First commercial banking manager.
Valley First’s knowledge of the region’s markets and local expertise has helped the credit union woo boomers wanting to start businesses, Smith said.
Indeed, within British Columbia’s interior including the Okanagan, Similkameen and Thompson valleys, an aging demographic and start-up businesses have been strong contributors to the regional economy, he added.
Citing government data, Valley First said small businesses make up more than 98% of all start-ups in B.C., employing nearly one million people.
Smith said older business owners tend to stay in contact with their professional and personal network as well as utilize their experience gained over the lifetime of their careers.
However, because personal losses may be harder to regain for boomers, a solid business plan and realistic expectations are critical for success, Smith noted.
Earlier this year, a Duke University study found that boomers in the 55-to-64 age group had become entrepreneurs at a faster rate than Generation Y over the past three years.
Among the factors for the increase in startup launches were retirement savings loss, job loss and lowered home values. Some also were finding it challenging to compete with younger people for jobs.