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So, how old must you be to succeed as an entrepreneur?

Thursday December 03 2020
Charles Makakala

Charles Makakala is a Technology and Management Consultant based in Dar es Salaam

You are in your middle ages and you pay to go to learn entrepreneurship? You are simply wasting money!’

This is one of the comments that were made when I shared news of a 14-week international Entrepreneurship Program at Hyatt Regency Hotel, which I was organising on behalf of an establishment that I am affiliated with, namely Kingdom Leadership Institute (KLI), in partnership with Regent University of Virginia, US.

Some individuals expressed reservations whether it is worth it to pay money to learn entrepreneurship. ‘Two million? Isn’t that enough for capital to start a business?’ a lady that is involved in business quipped.

These comments raise pertinent questions about our premises with respect to entrepreneurship, such as whether entrepreneurship can be learned and what the ideal age is for one to start a business.

The latter is the question that Benjamin Jones, a professor of business strategy at Kellogg School of Management, US, with colleagues from MIT and US Census Bureau, attempted to tackle in a paper titled Age and High-Growth Entrepreneurship. Moreover, given the disruptiveness of tech companies which were started by the youth, for example Facebook, Microsoft, and Apple, the team placed a special focus on the tech industry.

Using a dataset of 2.7 million company founders in the US, Jones and colleagues observed that the average age of founders in the US was 42 years. For tech companies the age was 45.

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These findings shatter the long-held assumption that entrepreneurship is a skill that is generally inborn, that is, if it doesn’t manifest at an early age then one is essentially not entrepreneurial and should not bother engaging in it. On the contrary, the study revealed that most businesses are started by people at relatively older ages, some in their sixties and seventies. Colonel Sanders, for example, the man who founded KFC at the age of 65 in 1952, is the poster boy for such entrepreneurs.

How about the age that one is most likely to be successful as an entrepreneur? In other words, are young people more likely to succeed in business than relatively mature individuals? The answer is – once again – a resounding no.

The study found, for example, a founder at 51 years of age is four times more likely to build a highly successful business compared to a 25-year-old. In other words, for every 100 successful companies founded by persons aged between 25 and 51, 80 percent would have been founded by founders aged 51.

Furthermore, for companies which had successfully exited the market, the average age of founders was even higher than the average age of founding companies, at 47.

The message is quite clear: youth is not necessarily an asset in entrepreneurship. To put it simply, you are more likely to fail as a young entrepreneur than not.

As a policy issue, this has serious implications in the way we approach entrepreneurship. For example, governments should encourage more middle-aged individuals to start businesses because they are more likely to be successful and provide employment to others.

Moreover, funders – venture capitalists and banks included – should make funds available for the right group of people. This will minimise the funders’ risks and maximise the impact of entrepreneurship in the society.

The question arises – what makes older people more successful as entrepreneurs? Is it because they have an eye for better opportunities, bigger networks, more resources, etc?

The answer may have to do with all of that – experience. To put it in the old-fashioned way, there are three factors for success in entrepreneurship – experience, experience, and experience! And experience implies time.

Vivek Wadhwa, a professor and technologist at Harvard, observes that ‘ideas come from need; understanding of need comes from experience; and experience comes with age’. Well said.

This doesn’t answer our other question regarding entrepreneurship training, though. Is it possible for entrepreneurship training to make people entrepreneurship material? It comes down to our conceptualisation of learning.

If we consider learning to be a series of lectures, then little will be gained from the experience. Nevertheless, the knowledge gained will somewhat become useful in helping aspiring entrepreneurs synthesise the lessons they get through experience and appreciate what they are going through. This is better than nothing.

However, by definition, training ought to be designed to transfer skills which participants can apply in real life. And this is best achieved when they participate in the learning experience by doing.

Think of what is called an ‘entrepreneur’s eyes’, that is, entrepreneurs see opportunities. A very natural trait, either you have it or not, right? That’s a fallacy. There are many ways to train one’s eyes to truly see one’s surroundings and quantify the opportunities observed. In fact, this is why you have investment analysts and consultants the world over.

The skills one needs to be a successful entrepreneur can be acquired step by step in a controlled environment. Any experience which can be acquired through time, can be learned in training.

For questions, comments, or assistance, please follow me on LinkedIn.

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Charles Makakala is a Technology and Management Consultant based in Dar es Salaam