Entrepreneurial aspirations aren’t only for the young. Older entrepreneurs bring greater expertise and life experience to being a first-time founder, but they also have greater risks to face.
Serial start-up founder Daniel Mumby recently launched an accelerator for over 30s and is running a Breaking Free workshop in Melbourne to help people work through the risks of starting a business.
He knows first hand how hard it can be when start-ups fail, blaming the failure of his two marriages on his start-up aspirations.
“Corporate inertia and concerns can hold you back. Whether you’ve got a great idea or just a yearning to do something more with your life, you’ll have to face the risks to get there,” he says.
He shared the top three risks older entrepreneurs face as they forge new careers, and how to mitigate them, with StartupSmart.
1. Managing the dip in income
One of the clearest and often most critical issues facing new founders is how they transition from a professional full-time income to building a business that might not turn a profit for years.
“It’s never easy to run a non-profitable company, but when you’ve got a mortgage, kids and a spouse, that struggle is much more serious,” Mumby says.
The trick to mitigating this issue is being careful about when you leave your job, and strategic about how you build your start-up.
All start-ups go through planning, building and launching stages before they’re making any money.
Mumby says the key is doing these phases slowly while maintaining a full-time job, so the time between quitting your job and profitability is contracted.
“After you’ve launched the business, a good yardstick is to not quit your job until you’re sustainably making half of your current salary because that’s manageable and hard to get to,” he says.
He adds that running a business isn’t just about cashflow.
“Often founders don’t run out of resources, they run out of resourcefulness. Take the time to work out everything you’ve got to offer, including relationships and expertise.”
2. Re-organise your life and bring your partner on board
Mumby says founders with more established lives and commitments need to recognise launching their own business will require significant life changes.
Failure to prepare properly will increase your risk of the business failing significantly.
“Getting you life model right before you do your start-up is critical,” Mumby says.
While that could be childcare, carpooling, hiring extra help or quitting a hobby or two, the most important thing you can do is get your partner on board.
“I actually recommend people make their wife or husband or partner an official advisor in the business. You’ll seek them out for accounting and legal help, and it’s really helpful to be accountable to someone in your business about the things that really matter,” Mumby says.
He adds even if you don’t make your partner an official advisor, they must be included in setting the early goals with which you measure your progress against.
“Always include them in setting the criteria and goals you’ll use to decide when you stay in or stop. You need to agree on how much the business is worth risking.”
3. Make the fear of failure lighter by preparing for it
The vast majority of start-ups fail in the first year, so Mumby says anyone who is serious about their career needs to have a contingency plan for returning to work.
“Don’t wait until it’s failed to work out how you’ll cope,” Mumby says.
Good tactics include keeping in touch with people in your previous industry and where possible, not quitting outright but instead organising for several months off before returning or re-assessing.
“Taking a year off from your career does have an impact. From personal experience, I know industry moves on and they don’t want to hire people who have been self-employed,” Mumby says.
Making sure your start-up ambitions fit into what you genuinely want to achieve with your life also softens the failure of a company.
“A start-up is often the best way to discover what you’re good at, and what you really care about,” he says.
“Use the opportunity to work that out. It took me 20 years to find out what I want to do and that was through my start-ups.”
He adds the best way to work this out and also to the find the confidence to launch your own business is to take your friends on the journey and ask them for honest feedback on your skills and what you bring to the world.
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