Entrepreneurial Spirit in Canadian Baby Boomers


For Canadian baby boomers, the road to retirement may take a planned detour along the way with a number of them making a stopover as a small business owner. Whether starting freelance consulting work, buying a franchise or opening a specialty business, a recent TD Canada Trust survey found 54 per cent of boomers have either started or have considered starting a small business prior to retirement. As of now, 15 per cent have gotten the start, with 39 per cent seriously contemplating the idea.

TD Bank Group commissioned Environics Research Group to conduct an online omnibus survey of 1,000 Canadians 18 years of age or older, with 426 who are considered part of the baby boomer generation (born 1946 and 1964). Results were collected between September 26 and 28 of this year.

“There are many benefits to being a small business owner, and this is clearly on the minds of boomers across the country,” says Dan Demers, Vice President, TD Canada Trust. “While thorough planning, access to finances, hard work and passion are a must for all business owners, there are specific considerations boomers should think about before starting a small business at this stage in their life.”

Reasons for Working

According to the research, the top reasons boomers consider starting their own business before retiring include 58 per cent saying they would like to be their own boss. Having the opportunity to make more money was key to 53 per cent and having a sense of personal achievement or pride was a factor for 50 per cent of them.

Of the boomers who’ve thought about opening their own business, 67 per cent say it would be a new venture outside of their current field of work. The survey also found that boomers believe the greatest challenges to starting a small business would be securing finances, taking on additional debt, finding new business or clients and balancing business and personal finances.

To help navigate challenges and find success, Demers offers advice to boomers considering opening their own small business:

Consider your personal finances: While boomers may be more established financially, it’s no wonder that financial concerns top their list of small business challenges. Not only will most boomers have less time to reach their financial goals, they will also need to balance saving for retirement with investing in their business. That’s why it’s important to have a full understanding of your financial situation and how it fits with your small business strategy. Look at your credit rating, personal debt, mortgage payments and retirement savings, as well as the financial situation of your spouse if you have shared assets or debts.

Focus on financing for your small business: Whether you are just starting out or looking to grow your business, cash flow – including access to capital and credit – is critical for success. Start by accurately projecting start-up costs and business expenses and learning about the financing solutions available to you – from an operating line of credit or small business mortgage to government grants.

Make a plan: Whether taking on consulting work to earn additional income during retirement or realizing a lifelong dream of owning your own store, start by setting your goals. Next, develop a business plan. While the plan can be scaled depending on the type of business you want to start, every plan should include a business model, financial plan, long-term vision and short-term goals.

Know your options: About one-third of boomers see work/life balance as being a challenge for small business owners, so look for banking services that help save time and money. Choose accounts that provide flexibility and convenience, while helping to cost-effectively manage monthly transactions.

Plan to retire: It’s never too early for small business owners to plan for retirement. Whether selling your business, handing the reins to an employee or family member or simply winding down your work, having a succession plan can help ensure the continued success of your business, or help you get the maximum value for your business.

Demers adds that access to financial knowledge and resources can help make the most of your small business.

“Whether you are just starting out, need to overcome a specific challenge or want to create a succession plan, take advantage of the advice and services that small business advisors from your local bank have to offer.”

Helping the Economy Grow

The fact so many boomers either want to become their own bosses – through choice or necessity – is definitely a surprising statistic according to Demers.

“Specific surveys of the same kind haven’t been done in previous years but we were definitely surprised with the numbers,” he admits. “I think it’s reflective of some of the economic realities of some of the boomers that are facing retirement.”

While the results of the survey may come somewhat unexpectedly, Demers states it could be a huge positive, not only for the individuals who want to engage in the entrepreneurial spirit, but for the overall betterment of the Canadian economy.

“I believe it is a very exciting thing because we’re looking at a very dynamic group of individuals who are very experienced in the Canadian economy who are going to continue to contribute hopefully and share intelligence and knowledge. I think if the survey happened five years ago, most would have said ‘no, no’ I’m just going to retire,” Demers laughs.

Demers is of the belief there are some individuals in this age range who simply want to keep working and have always had the desire to be their own boss. But he doesn’t discount the fact there are likely a number of boomers looking to open their own business because they need to from an economic standpoint, perhaps not having as much money coming in from their own retirement savings and/or a company pension plan leaving them uncomfortable with what may be a shortfall.

“I also think there are a number of individuals who were lucky and have worked in areas, be it the public or private sector, where there are good pensions and they feel they’ll be able to generate a decent revenue out of retirement but are young and dynamic and are looking at doing things that are very different from what they’ve done in their career.”

“If you look at the survey, one of the things that really popped out was that two-thirds of the individuals we surveyed said they would do something different in a different sector in a different area than what their career was, which speaks to the interest and passion and areas of education that they may not have touched as part of their career which they have as a background.”

“The odds are much higher for continued success for these businesses that are started with individuals that have working experience, knowledge, managerial experience, so they should be in much better shape to ramp up their business and maintain it.

It’s very different than someone who has no managing experience and starting a new business in their early 20s – maybe has some money to inject in the business but is going to learn about running a business as they are doing it versus these individuals who probably have 30 to 40 years experience in either the business sector or other areas.

“We will see these businesses much more stable and sound in terms of their financial requirements because they will understand cash flows,” Demers notes.

Future Results

Given this is the first year of the survey, future annual results will divulge just how successful these boomers are in their new ventures. But Demers says longevity is not necessarily a gauge for success or failure.

“Some may say ‘I’m going to do this for three or four years and I’ll just shut down and stop consulting and I’ll go to full retirement’,” Demers states.

According to statistics, 50 per cent of small businesses in Canada survive more than five years. Within this sector of boomers looking to get into the world of entrepreneurism Demers feels the percentage may be similar but the reasons for it will be different than the national view. With the boomers it’s much more likely to be based on personal choice as opposed to businesses running out of a life cycle and failing to be successful financially.

This survey takes into account executive management, including presidents and chief executives, because as Demers notes, even they would say that they had bosses to answer to, so being accountable to nobody but themselves would be an enticing proposition for them as well. 

More than one million small businesses in Canada employ Canadians, and the products and services it creates results in a significant portion of our country’s gross domestic product. There are an additional three million Canadians that are self employed. The contribution to the annual GDP is in the range of 35 per cent.

In the past few years small businesses have been growing. In 2011, they added a net of 21,000 new employees, which to a large organization may not be a large number, but it is with small business, where many of these enterprises only employ three or four people.

The good news for boomers looking to start a business is that age has very little to do with whether or not they are able to secure financing from a financial institution – it’s far more about the business plan as opposed to age.

“The important first thing is the business plan and how the cash flow looks,” Demers reveals. “It’s a matter of looking at a five-year plan and how cash flow will look. The injection of cash or capital into the business will also be looked at.”

“There is a different personal profile than someone that is younger and hasn’t built any capital or equity in their home and so on, so I would say the profile of an individual starting a new business that is a boomer who has more savings, maybe some retirement income, in addition to a house that’s paid or almost paid is a different risk profile than someone that is brand new.”

“We recommend having an accountant and making sure the tax implications are very well looked at as a critical piece, especially for boomers who may have other assets and other considerations to keep in mind,” Demers suggests. “They want to be sure their business is protected if something happens to them from a health perspective, so all of those pieces, regardless of the complexity of the business, we do recommend people take the proper steps.”

Another obvious resource for individuals looking to do research on the prospect of being an entrepreneur is through online assistance.

“We know that boomers, as their kids leave home, have a lot of time to spend online and there are numerous banking sites to help small businesses look at different scenarios,” Demers says.

If you are thinking about heading down this route, it’s essential to set yourself up with a financial adviser or planner to ensure they have the proper risk appetite for the type of venture they are looking to become part of. It provides you with access to a professional who can advise on how much money should be injected versus borrowing or other avenues for putting capital into the start-up.

“We also see people not respecting their business plan,” Demers states. “They’ll build a wonderful business plan and cash flow and they continue to inject money, versus asking the hard questions of saying ‘why is my business plan not working as planned and what do I need to do to adjust and limit the risks’.”
Small business owners can also look to online resources for additional support.