Encore entrepreneurs – With retirement out of reach, a growing number of baby boomers take on business ownership through franchises.
When Tim Stoll was in his 40s, he envisioned himself climbing the corporate ladder until retiring in his 60s. But after two decades of working for one of Baton Rouge’s chemical corporations, the business manager with a Ph.D. in chemistry had a change of heart.
Says Stoll: “I wanted to have more control over my own financial destiny.”
Now, the 56-year-old works for himself as owner of executive and business coaching franchise The Alternative Board for the Baton Rouge metro area. He bought the territory in 2009 and has 31 small-business clients he coaches one-on-one or through monthly Alternative Board meetings.
“The thing that drew me to the franchise opportunity was the fact there were a lot of things that wouldn’t have to be reinvented, including the sales and marketing aspect,” he says. “That was very different from what I experienced in the chemical industry.”
He is one among a growing number of baby boomers who are turning to franchises to become business owners at a later stage in their careers.
Entrepreneur Source CEO Paul Segreto says the trend of baby boomers’ pursuing business ownership—specifically through franchises—has taken off since 2010 for several reasons.
“A lot of baby boomers are looking at their retirement funds, and they are not where they want them to be,” Segreto says.
The fact is, many boomers simply cannot afford to retire now. But most don’t perceive continuing to work in a negative light.
In a recent study conducted by AARP, 1,502 working adults age 45-74 were polled about their attitudes toward work. While 96% said they continue to work because they need the money, 92% said they also enjoy working.
Additionally, Segreto has observed that although many baby boomers are underemployed, some due to downsizing, they also are healthier and living longer than previous generations.
This is making business ownership an unprecedented possibility among the senior community. About 25 million people—one in four Americans age 44 to 70—would like to start their own business or nonprofit organization in the next five to 10 years, according to a study conducted by the MetLife Foundation and Encore.org, a San Francisco-based nonprofit organization. Encore.org offers free information for people pursuing “encore careers—jobs that combine personal meaning, continued income, and social impact—in the second half of life.”
“It’s making a difference in people’s lives versus making a difference in a corporate bottom line,” says Stoll about the nature of his business coaching work with The Alternative Board.
Like Stoll, a large share of boomer adults have some sort of management experience, according to the Encore.org survey. So it’s no wonder that business coaching is one of the five most popular types of franchises among baby boomers.
“If they’ve been in a management or leadership role, they’ve probably done a lot of coaching,” Segreto says. “It’s very attractive for transitioning executives.”
Baby boomer business owners are also drawn to home-based, tutoring or educational, senior care, staffing and recruiting franchises.
So how do you determine if a franchise opportunity is the right one for you?
“One of the first things, regardless of the type of business, is I ask them if this is going to help them in terms of income, lifestyle, wealth, and equity,” Segreto says.
The franchise sector contributes about $32 million a year to the local economy and is projected to create about 200,000 more jobs nationwide in 2014, outpacing the job growth rate, according to the International Franchise Association. In Louisiana, there are more than 12,750 franchise establishments, IFA says.
In a down economy, these statistics were especially meaningful to 58-year-old Ted Fireman, who owns FranNet Louisiana, a franchise business consulting firm.
“I spent my career in corporate America, and when I was 40, it was a breeze for me,” he says. “If I wanted to make a change, it was easy to do. It was no problem for me to find a job using my skills. But I found that was starting to change when I was in my late 40s.”
Three of his employers downsized back to back, and the gaps between his jobs grew from four months to seven months to 10 months long.
“I couldn’t afford that kind of period of unemployment,” he says.
So he went into business for himself by buying the franchise, FranNet Louisiana, where he is a consultant for clients who want to pursue franchise opportunities in the state.
“There is no substitute for research,” Fireman says. “To make smart, knowledge-based decisions, it takes time and lots of effort.”
Segreto advises clients to look at the longevity of a business. He also suggests potential franchisees judge how proficient a brand is in the digital space.
“Are they using technology to their advantage within the organization and tracking potential clients to the brand?” he asks his clients.
For Stoll, The Alternative Board’s customizable website and corporate social media infrastructure were selling points. For example, when a potential client in the Baton Rouge metro area visits the AB’s corporate Facebook page, Stoll receives an alert and can follow up on the local lead.
As the digital space grows and the role of social media increases, the face of business is also changing.
“We’re seeing multigenerational franchisees,” Segreto says. “We’re seeing families partnering up more than in the past.”
Baby boomers are teaming up with their grandchildrenn who are today’s marketplace “influencers,” he says.
“There are more and more opportunities. The virtual space has eliminated the boundaries,” he says. “We’re seeing interesting propositions transcend the generational differences.”
As for an exit plan, Stoll and other baby boomer entrepreneurs enjoy the option of being able to leave on their own terms. Owning his own franchise affords him the opportunity to reap the benefits of his investment 10 to 15 years from now.
Says Stoll: “Certainly owning my own business and building it to sell someday had attraction to it.”