Late-blooming entrepreneurs - includes related articles on a three-year plan to starting a business and on questions to prepare for owning a business - Cover Story

Home Office Computing, Nov, 1991 by Linda Stern

When Dick Slade of Bethesda, Maryland, retired from his video-editing job at NBC in 1987, at the age of 55, he knew he would have to keep working. "We didn't have a gigantic bundle of money to live on, and I wanted to do something else," he says. So he and his wife, Ruth, who had been running her own small video-production company for 12 years, took his pension in a lump sum, cleaned out the bulk of their savings, and spent $250,000 buying the equipment they needed to establish Audio Visual Artists.

"That's called taking a chance," he says, with the broad grin of a man whose gamble has already started to pay off. "I'm betting that Ruth and I can make more by investing in our own ability than we could by putting the money somewhere else."

Today, Dick and Ruth Slade are making a go of their business. They produce public-relations videos for companies, schools, and associations, along with sales and training tapes, and are now looking into producing and distributing their own educational videos. Ruth does much of the scriptwriting and handles the books (she has a degree in accounting). Dick takes care of the technology, and thinks his 8 years in a motion-picture lab and 25 years at NBC have put his video-editing abilities ahead of his numerous competitors'.

Slade is on the cutting edge of more than video technology. He's one of a growing number of early retirees who take retirement packages, leave the corporate world, and start their own businesses. In the past 10 years, the number of entrepreneurs past the age of 55 has grown 12 percent, to more than two million, while the population in that agre group has grown only 7 percent, according to Department of Labor statistics. Not all, of course, are corporate refugees. But Joan Learn, president of the Greenwich Group, a Connecticut corporate outplacement firm, reports a 20 percent annual rate of increase in the number of retirees she sees who are interested in self-employment.

"This is definitely a burgeoning trend," says Bernard Tenenbaum, director of the George Rothman Institute of Entrepreneurial Studies at Fairleigh Dickinson University in Madison, New Jersey. "There are a whole lot of folks who have been phased out of large companies. They have a nest egg, their kids are out of college, and they are at a point in life where they are able to take a risk. And it's attractive. They can afford to follow a dream for the first time."

PLANNING THE DREAM

That dream can be blissful or it can be a bummer; the outcome depends on how carefully you plan before retirement. "Everyone should be planning all the time," says Learn. But at least three years before the expected retirement date, would-be entrepreneurs can start the three-step process that she and New York management consultant Donald Teff developed to guide people through the transition from corporate cog to independent businessperson. (See the accompanying sidebar, "3-Year Countdown to Entrepreneurship," page 30.)

The first step might be called Know Thyself. Carefully review your own abilities and inclinations, as honestly as possible, to see if you are really prepared for the headaches, hard work, and responsibility that entrepreneurship entails. Many outplacement firms offer aptitude tests that will help you determine your strengths and weaknesses.

Figure out which business skills you need to learn, and catch up on them by taking a computer course or accounting course.

Decide what type of business you'd like to own and run. "The best business for retirees to go into is one in which they have experience and skills," says Jean Reed, a retired Jacksonville, Florida, marketing executive who counsels start-up companies as a member of the Small Business Administration's Service Corps of Retired Executives (SCORE). "They tend to fail when they go into a business that is totally unrelated to what they are doing in the past."

CHOOSING A BUSINESS

When John Gedeon retired from the Navy at 48, he knew that he was too young to stop working. A standard battery of psychological aptitude tests he'd taken in the Navy had convinced him he had an entrepreneurial personality. "My wife, Barbara, and I could have bought a motor home and gone off traveling, but the motivation to have our own success was stronger than the urge to travel," he said.

It wasn't immediately clear what business to pursue. The Gedeons looked into several different franchises and briefly toyed with the idea of opening a cinnamon-bun bakery and a clothing distributorship. Finally, they decided to go with what they knew. Both had real estate licenses. "It seemed foolish to waste our knowledge base," says Gedeon. So they bought a Help-U-Sell franchise, investing close to $40,000 just to open their doors and another $20,000 or $30,000 on equipment and other up-front costs. They have been building their business ever since. The couple lives off of John's Navy pension and plows all of Gedeon Group's earnings right back into the business.

The Gedeons discovered franchises can be ideal for older entrepreneurs. "A good franchise can give you all of the pleasures of entrepreneurship without the aggravation of having to decide everything yourself," says Tenenbaum. The franchising company will often supply a detailed business plan, so you don't have to reinvent the wheel. "If you follow the plan, chances are you'll be successful," John explained. (For more on franchises, see "70 Great Franchises You Can Run from Home," in the October issue.)