The Players

Name: Rachel and David Cohen

Age: Late 40s

Number of children: 5

Residence: Brooklyn NY

The crisis

In the United States it’s called a “pink slip.” In Germany it’s a letter and it’s blue. But no matter the colorful language used to describe an employee’s termination notice no one likes to find out they’ve just been laid off. If you’re over 40 when the challenge of finding a new job is that much greater it’s reason to panic.

Or maybe you haven’t lost your job but you’re beginning to worry because you have a few children in the “parshah” and the thought of paying for all the wedding-related expenses is causing you to toss and turn at night? Is it time to look for a second job or at least a better-paying one?

Or maybe you just have an inner voice telling you that while your family’s expenses are rising you’ve reached a dead end in your salaried position. Maybe you should move on before you’re mired in a permanent rut?

When a midlife financial crisis strikes the thought of opening a business and being your own boss can sound like the perfect solution. But dangers lurk as Rachel and her husband found out.

The background

The Older Entrepreneur

We know that a majority of new businesses will fail yet the number of people over 40 starting their own businesses is growing. According to the Ewing Marion Kauffman Foundation a leading research outlet on entrepreneurship more businesses are being started today by people aged 55 to 64 than by the under-25 crowd.

And they’re largely succeeding. In a Kauffman Foundation study that tracked the survival rate of 5 000 start-ups launched in 2004 they found that 64 percent of the surviving companies were headed by entrepreneurs aged 45 and up.

According to business mentor Dennis Ceru founder of Strategic Management Associates older entrepreneurs may be more successful because they can draw on greater financial resources and have a wider network of business associates to tap for support and advice. Still if someone lacks previous business experience and access to ready money age may not make such a big difference. And if you open a business from a place of desperation rather than strength you’re liable to make some big mistakes.

“What a person shouldn’t do is try to open a business while in the middle of a financial or emotional crisis ” says Meir Shterenberg project director of JOIN Israel’s Pitronot advocacy program which helps Israelis who have fallen into financial and legal quagmires.

“The best way to learn a business is to work for someone else for at least a year or two ” advises Meir. “When you work for somebody you gain experience from the inside. If you keep your eyes open instead of just doing your job you’ll learn how to manage a business.”

If that’s not an option Meir suggests turning to an organization like Mesila which helps people create sustainable long-term solutions for their economic challenges. Mesila’s business division gives free one-time business consultations and counsels those who want to open a business as well as current business owners. The organization also provides professional courses in areas such as marketing and finance.

But even if you do everything right the economy can throw a curveball that puts your business off balance. How you respond can make or break your business as one owner of a small retail shop found out. (Excerpted from Mishpacha Issue 669)