To be sure, starting a business in midlife and beyond is different than doing so right out of college. There’s the endurance factor, for starters.
“Entrepreneurs in their 20s can work 20 hours a day and have all sorts of energy,” said Bruce Bachenheimer, clinical professor of management and director of the entrepreneurship program at Pace University.
But the financial responsibilities of a startup can still mean that late bloomers must live in a state of sleep deprivation—at an age when that’s tougher.
But there’s at least one big advantage that midlife entrepreneurs bring to the table: “Connections,” Mr. Bachenheimer said.
It’s easier and cheaper than ever to do so, thanks to the emergence of so many online sites — LLC.com and LegalZoom.com, for example — offering cut-rate legal services, says Bruce Bachenheimer, director of entrepreneurial studies at Pace University.
The pros and cons of business structures for an individual business have to be determined on a case-by-case basis, says Pace’s Bachenheimer. “The choice of ownership structure is not a ‘business strategy’ type issue,” he maintains. “It is purely a legal/tax issue and has very specific, detailed implications and consequences.”
The dressmaker is a good example of how to balance two important entrepreneurial qualities: creative passion and a sensible inclination to follow the market’s lead, says Bruce Bachenheimer, management professor and director of entrepreneurship at Pace University.
“Entrepreneurs are close to the customer and in touch with what the market needs and wants—they have to be, in order to survive,” he says. “On the other hand, they need their passion and commitment to keep going and be successful.”
“What really makes for great incubators is the mix of the companies and the synergies they can create, the energy and buzz that surround them,” says Bruce Bachenheimer, management professor and director of entrepreneurship at Pace University.
Bruce Bachenheimer, program director of entrepreneurial studies at The Lubin School at Pace University, adds, “Build a real board of advisors, not just people who agree to let you use their name as ‘window dressing’ for a business plan or investor pitch – rather, experienced entrepreneurs and seasoned professionals who will dedicate the necessary time to understand your business and formulate meaningful advice. The young entrepreneur should not only assemble such a board, but must understand what is required to keep the advisors engaged and committed.”
Meanwhile, skilled workers in traditionally low-wage developing countries, such as India and China, are beginning to demand higher pay and benefits — moves that will take yet another bite out of businesses’ profits, says Bruce Bachenheimer, a clinical professor of management and director of the entrepreneurship program at Pace University’s Lubin School of Business in New York. “Some firms might opt to stay domestic as the profit margins resulting from hiring overseas workers narrows.”
The majority of 2,007 customers polled said they were more likely to buy from companies that make energy-efficient products, promote health and safety, and support fair labor practices. That sentiment, however, should not influence your marketing game plan, warns Bruce Bachenheimer, a professor of management and director of the entrepreneurial program at Pace University’s Lubin School of Business in New York City. “A lot of people say, ‘Yes, I want to buy things that are socially conscious,’” he explains. But “the bottom line — no matter what we consumers say we’d like to do — is that it has to be similar [to competitors] in terms of price and ease to purchase.”
Building Your Brand
When it comes to branding, a social enterprise should wear its heart on its sleeve, Bachenheimer says. Your associations with your values become just as important as those with your goods or services. You can inherently brand your values by forming relationships with socially-conscious retailers (think Whole Foods, the natural-foods grocer) who are known for vetting their vendors. A social enterprise’s “emotional” branding can also be bolstered by labeling from various certification agencies, such as Fair Trade’s FLO International, says Bachenheimer.
Communicating the Mission
Educating consumers about your social impact is perhaps one of the biggest and most delicate challenges of marketing the enterprise. “When people understand it, they might be willing to go a little bit out of their way and pay a little more money,” says Bachenheimer.
Business is booming
Young medical school students aren’t the only ones recognizing the importance of an MBA in today’s changing healthcare environment. Professor Bruce Bachenheimer, director of entrepreneurship at New York’s Pace University, says quite a few established physicians are returning part-time at night for their MBA.
“The doctors coming in recognize that insurance and medical billing are making it much more difficult to be a doctor,” Bachenheimer explains. “They’re part of a cog of a much larger wheel, and [healthcare] is much more of a business. That has prompted some doctors to say, ‘Let me understand the business so I can play this game better.’”
Some of the physicians Bachenheimer has spoken with don’t want to work directly in medicine, but instead want to use medical training and an MBA to help launch new medical start-ups. Others are interested in wireless medical technology, so they need to be aware of the business side of the equation. And some simply want to take over an existing practice and need to better understand the business aspects that are involved.
“Other doctors are just tired of medicine,” Bachenheimer admits. “I had one family doctor say to me that when patients walk in, he can tell in two minutes what their problem is, and it almost gets mundane. He just wants to do something else.”
In addition to Uncle Sam’s resources, Bruce Bachenheimer, a professor of management and director of the entrepreneurial program at Pace University’s Lubin School of Business, recommends contacting like-minded programs from the foreign markets you aim to enter. “Just as the U.S. has all these services to help exporters, virtually every foreign country in the world [has] some kind of trade development office,” he says.
An international partner can make or break your global endeavor. And finding the right one is not always obvious. “It doesn’t mean finding the biggest and the best in the country,” Bachenheimer explains. “It’s [about] finding someone whose interests are most closely aligned with yours.”
A database of trade events searchable by country, state, industry and date is available at export.gov. No matter how you find a partner, though, conduct due diligence, Bachenheimer says. “Ask who their customers are, how long they’ve been in business and seek out their references.”
“The focus was social entrepreneurship, how to use entrepreneurship to alleviate poverty in some of the poorest countries in the world,” said Professor Bruce Bachenheimer, who led the trip.
“A lot of people do a plan because it is a requirement to get money,” said Bruce Bachenheimer, clinical professor of management at Pace University in New York. “The key, though, is to step back and not think of it as something you have to do to get a loan, but something to teach you what you don’t know, something you can use to prove and demonstrate that there is alignment of a business with opportunity and resources.”
Central to a workable plan, Bachenheimer said, are these five steps: 1. Determine what you don’t know, what assumptions need to be tested and what research needs to be conducted; 2. Put it all down on paper in a coherent, complete and convincing style; 3. Focus the plan on the customers’ needs and any critical market conditions, industry dynamics or macro-environmental factors; 4. Demonstrate an alignment of the opportunity, entrepreneur and resources that coincides with current market conditions, including appropriate levels of risk and return; 5. Provide meaningful milestones and realistic means of achieving them, explaining how you will actually achieve sales.
“In many cases, the real value of writing a business plan is the process of actually creating it,” Bachenheimer said. “Don’t do it because someone needs it; do it as if your business depends on it.”
On Dec. 6, Pace University’s Lubin School of Business held its fourth annual Pace Pitch Contest in New York. Open to full- or part-time college students, recent college graduates and first-time entrepreneurs, the contest is one of many like it nationwide that’s based on the popular “elevator pitch” concept.
“Basically, imagine you’re in the lobby of a building where there happens to be a bunch of venture capitalists,” explains the contest’s director, Bruce Bachenheimer, clinical professor of management at Pace. “You get in the elevator and notice a partner at a big VC firm who’s riding up with you to the 40th or 50th floor. You have three minutes of captive time with this venture capitalist; can you tell him or her about your idea in a very concise, convincing, complete way?”
Not many people can, according to Bachenheimer. The contestants in his pitch contest, however, are notable exceptions. They’ve mastered the art of entrepreneurial persuasion. It doesn’t matter what they’re presenting, Bachenheimer insists; they can sell it.
“It’s not about the idea itself,” he says. “It’s the way of thinking and the process of doing it that’s important.”
Still, the ideas are pretty great. Take this year’s winners, for instance. In the “Social Venture” category, MBA student Sarah Lipkin proposed a nationwide art program for mentally disabled individuals. In the “New Business” category, meanwhile, entrepreneur Joe DiPasquale presented his online start-up, CollegeWikis.com, which provides user-generated information about schools across the country.
Both ideas are indicative of promising start-up trends—social entrepreneurship and Web 2.0—that are poised for continued growth in 2008.
“In the area of social entrepreneurship, the impetus for starting a company is to further or advance a cause or purpose,” says Bruce Bachenheimer, clinical professor and program director at Pace’s Lubin School of Business. “It’s about a mission to address any number of ills, from AIDS to world hunger or environmental issues. And it’s about having a sustainable type of business. It’s something larger than just making money,” he continues. “It’s using entrepreneurship—the same skills and concepts you would apply to a commercial business—to solve important problems.”
Sherri Muth, who earned a social entrepreneurship certificate at Pace, said she picked up important business skills through the program, which she applies to her work as the director for a nonprofit rehabilitation center that develops and finds jobs for people with disabilities. “One of the assignments was to write a business plan,” she recalls. “It made me realize that we need to run nonprofits just like any other kind of business. I took courses in law, strategic planning, business planning, budgeting, IT.”
Bruce Bachenheimer teaches entrepreneurship. He’s also a student of it.
After years on Wall Street, he bought a 36-foot sailboat and set off for the Caribbean and South America. Upon his return in 1993, he began a teak-importing and specialty woodworking company in Annapolis, Md. Later, in Australia for graduate school, he started an online financial company.
Now, the 43-year-old Dobbs Ferry resident teaches entrepreneurship at Pace University. He cites three traits, commonly recognized in academia and exemplified by his own endeavors, necessary to becoming a successful entrepreneur: - A need for achievement, - Self-direction, - Comfort with taking risks.
Bachenheimer said that entrepreneur traits can be taught.
Nearly four out of five new businesses fail in five years, but the rate decreases dramatically for businesses started in “business incubators” where the owners are given resources and mentoring, he said.
“That’s a good demonstration that entrepreneurship not only can be taught, but you can take something prone to high failure rates and closure rates and really make it successful.”