What is the age of the average start-up entrepreneur?
Maybe you haven’t given it a second thought. If you have, you might imagine it’s somewhere around the mid-20s. There is a lot of media attention surrounding young tech millionaires, some of whom are still in their teens. But is this coverage representative?
This article looks at the research, which produces interesting results. Most data come from US sources because of the larger number of new companies created, compared to the UK.
If you are an aspiring entrepreneur or already a business owner, it’s good to know if you are on the right side of the age line for success. Reading the data and understanding the evidence may be just the spur you need.
According to the ONS and the Department for Business, Energy, and Industrial Strategy, there are 5.9 million businesses in the UK. In 2018 alone, more than 200,000 new businesses were formed. Naturally, not every new venture is a potential Google or Apple, nor should it necessarily dream of becoming one. And yet, amongst those new start-ups, big dreams exist.
Demography is not destiny
The US data indicate that the average age of an entrepreneur at the time they start their company is 42.
In the UK, the average age of a business owner is 40, and the most common owner name was ‘David’. Males dominate the listings. ‘Sarah’ comes in at number 26. Women owners only represent 14% of small and medium enterprises (SME) in the UK, although the trend is on the rise.
Entrepreneurship is still alive and well. During 2019, almost 10,000 new companies were established by owners over age 60. Strikingly, eleven businesses were started by individuals already in their 90s.
Do you fit the mould?
The typical business start-up entrepreneur in the UK looks like this:
- In their 40s
- Lives in London/the South East
- Educated to at least A Level, and often with a degree
- About 65% have no prior experience of owning or managing a business
The government is introducing initiatives to increase female and BME representation, and to challenge the north-south divide. Confidence in ability can be measured as well. The Global Entrepreneurship Monitor reported that those in the south of England had much more confidence about starting a business than those living in Scotland or Northern Ireland. And men had more confidence than women.
The self-employed are likely to start in their 20s and 30s, with some ventures being a side-line to their main job. In fact, women and minority-ethnic groups are much more prominent at the micro-business level: they start 90% of these ventures. Just under 10% of small business employer-owners are aged under 35.
The attributes for successful entrepreneurship
Of course, every business owner is unique. Nonetheless, certain key factors have been identified by researchers, as follows:
- Your attitude to business
- Willingness to make personal sacrifices
- The ability to plan ahead
- A focus on your goals
- Being open to external advice and guidance
The good news is that none of these attributes are gender-specific or age related.
Applying filters to the business-creation sector
Looking at averages, out of context, can seem bland and impersonal. Starting a local florist or dry-cleaning business feels different to organising a tech or bio start-up. Scalability makes a difference.
The Harvard Business Review (HBR) carried out a forensic study into entrepreneurship. They considered whether the new business was granted a patent; if it received Private Equity or Venture Capital finance; if it was part of the STEM community (science, technology, engineering, and mathematics); and where it was based (e.g. a hub like Silicon Valley, or the M4 Corridor).
We all know the tales of the famous entrepreneurs who started their companies in their 20s; Zuckerberg, Gates, Jobs, et al. Nonetheless, the data revealed a different story about the age of success.
The filtered data showed a 40 to 47 age range. This included software and tech at the younger end, and oil, gas, and biotechnology at the upper range. Young social-media millionaires tend to be obsessions of the media, for obvious reasons, but that doesn’t make them remotely representative.
The team at HBR kept refining the data. The question they wanted to answer was – what traits did the most successful start-ups share?
Only the top 0.1% of start-ups were considered, based on their growth in their first five years. The team then filtered again, based on employment growth, then again, according to the fastest sales growth. Finally, they filtered for those who had a successful exit through an IPO or acquisition.
The owner age started at 45 and crept upwards, not downwards. Start-up entrepreneurs between 40 and 60 fairly thrashed the opposition, while success rates levelled out after 60.
If you were faced with two entrepreneurs and knew nothing about them besides their age, you would do better, on average, betting on the older one. HBR.
The key factor here is relevant work experience. Two entrepreneurs, called David and Davina, start similar businesses in the same area. Davina has three years of relevant work experience. David has none. Davina is 85% more likely to be a success than David.
Even the likes of Gates, Jobs, Bezos, Brin, and Page saw greater success as they got older and wiser. Steve Jobs was 52 when the iPhone launched.
So, if you have that fire in your blood, it’s never too late to become an entrepreneur. What are you waiting for?
Are you an entrepreneur? Would you like an impartial guiding hand to create a successful business exit? Contact one of our financial planning specialists here – firstname.lastname@example.org or on 02073986600.