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Older, wiser Minnesotans turn to self-employment

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Chester Hoernemann
Chester Hoernemann started Step by Step Behavioral Counseling in Glencoe, Minn. in Nov. 2011. Hoernemann worked in the construction field for years before the physical stress of the job forced him to navigate his career to the mental health business.
MPR Photo/Jeffrey Thompson

When inmates at McLeod County jail in Glencoe struggle with anger or suicidal thoughts, the person they talk to is 72-year-old Chester Hoernemann, who bloomed late as a therapist and even later as a solo practitioner. He opened his own practice in November and the county pays him to provide mental health services.

Hoernemann spent decades digging basements and installing plumbing and heating before realizing his body couldn't take it anymore. "I was too young to go on Social Security and too old to continue in that profession, so I decided to go back to school," he said. "Thirty-seven years after graduating high school, I started college." 

He chose therapy because he'd been through treatment himself, for alcoholism, and was impressed by the process. He earned his master's degree in 1999 at the age of 59, when most people are contemplating retirement.

Now he's part of a growing contingent of people over 55 who are going into business for themselves, becoming what some call "encore entrepreneurs" or "olderpreneurs." 

While people tend to think of self-employment as a young person's gamble, a  March 2011 report from the Kauffman Foundation, which tracks entrepreneurism in the U.S., said that simply isn't so.   From 1996 to 2010, according to the report, the rate of entrepreneurial activity actually decreased among those aged 20 to 34. But for people approaching retirement age, the rate increased. 

With experience comes ingenuity.

"An aging population and increasing rate of entrepreneurship among older adults has led to a rising share of new entrepreneurs in the fifty-five to sixty-four age group," the report says. "This age group represented 14.5 percent of new entrepreneurs in 1996, whereas it represented 22.9 percent of new entrepreneurs in 2010."

One factor, of course, is that aging baby boomers have swelled the sheer number of people over 55 in the U.S. and Minnesota. But there are other possible explanations for the uptick, too. Boomers may be healthier and more entrepreneurial than previous generations and view retirement as the chance to finally start that business they've been dreaming about.They also may have business connections and savings to tap for startup.

For Hoernemann, part of the appeal is being able to help people. "Maybe it's my age, but I really make a good connection with the inmates," he said. His personal trials and a stint with the Minnesota National Guard help, too. 

"Maybe they are felons and can't compete. I say, 'Find a career where your charges don't mean that much and go to school.'" he said. "This gives them an opportunity to get their heads together and break with the crowd that got them into trouble in the first place." 

SW Initiative Foundation
Greg Jodzio Program Specialist Southwest Initiative Foundation Hutchinson, Minn.
MPR Photo/Jeffrey Thompson

When a client in his or her twenties says it's "too late," Hoernemann unfolds his own story. "It works like a charm," he said.

But launching his business, called Step by Step,  and specializing in anger management and domestic violence counseling, has brought its own challenges. He recently completed the large stack of paperwork necessary to get paid by insurance companies, which can take 60 days to cough up. 

"I love the advertisements on TV that describe the wonderful feeling of being independent," he said. "Yeah right. You can lay awake all night being independent."

Certainly, graying rural Minnesota communities are banking on the upward trend. Ben Winchester, of the University of Minnesota Extension's Center for Community Vitality, studies the impact of 30- to 49-year-olds moving to small towns, which he calls the "brain gain," sometimes to start businesses. He sees a new emphasis on entrepreneurship as an economic development strategy in smaller cities struggling to maintain their populations. 

I'll go back to work but with something I want to do.

Nurturing older entrepreneurs, he said, "is a very good strategy. With experience comes ingenuity. The more experience people have, the more networks they have and knowledge they have in a specific industry. We're moving away from being wage and salary workers in this country. There has been a shift away for 10 years now."

On the flip side, people over 55 may be joining the ranks of the self-employed because they have to. They may have lost a job in the recession and, due to their age, had difficulty finding a new one. Or, perhaps they saw their retirement funds wiped out by the stock market downturn.

That's what happened to Greg Jodzio, who in 2008, at age 61, opened a hot dog stand in Hutchinson and now assists older entrepreneurs for the Southwest Initiative Foundation, which targets the age group with microloans and other help "I was retired and paddling the kayak in the lake," he said. "And all of the sudden my 401(k) took a big nosedive. It took my wife all of 20 seconds to say, 'You need to go out and get a job.' So much for the retirement my father enjoyed."

"I told my wife, 'I'll go back to work but with something I want to do.'" Older entrepreneurs, Jodzio said, can often live on less, thanks to pension or savings income, and so "can do something that's satisfying." 

That's where the hot dogs came in. Jodzio was born in Detroit and moved to Chicago in high school. "Detroit is a big hot dog Mecca in itself," he said. "It has the famous Coney Dog. In Chicago, hot dogs are king. I spent those formative years around hot dogs. We used to go to Maxwell Street for hot dogs." "Originally, I thought I could start the business for $4,500 and it would be a no brainer," said Jodzio. 

He went to the Southwest Initiative Foundation for a microloan and learned by formulating his business plan there was more to the project than he'd anticipated. He ended up with a $12,000 microloan. "I would have probably bought a cart and then tried to get approval (from regulators) and they would have said this cart doesn't qualify for some reason. You can sell hot dogs, but you have to have packaged mustard. By the time I finished, my expense was $20,000, but it's a really nice cart."

Red's Hot, the name of the stand, makes money, and Jodzio translates his success into advice for other entrepreneurs who come to the foundation. "I say, 'You can do it. You can learn computer programs or how to do Facebook or Twitter and all that stuff.' It may take us a little longer than a 20-year-old or high school senior but we can do it."

Hoernemann is one of Jodzio's clients. The foundation gave him a $6,000 microloan to get started. "My printer is old and slow," Hoernemann said. "I needed office equipment. I had to pay the rent and had to put money back into the savings account, which has taken a serious hit over the years. That was basically to open the doors."

Starting a business later in life--with all the attendant startup expenses, not to mention hefty student loans--means Hoernemann has debt that he may never get out from under. "I'll probably work forever," he said. "But it's my choice. I don't see myself getting rich. As long as I can make the bills and put a little more into our household account, I'm happy."