A Golden Opportunity

An aging population points to a growing business niche. In 1900, life expectancy at birth in the United States was 49 years. Today, it's 76. Thanks to better nutrition, medical breakthroughs and healthier lifestyles, people who have reached 55 can expect to live into their 80s. There will be a 50-percent increase in the over-70 population in the next three years and a 90-percent increase in the next 10 years, according to Age Wave Communications Corp., a marketing company in Emeryville, California. This aging population represents $300 billion in spending power.

But the incredible news for potential business owners interested in serving this population is that, between now and the year 2030, the number of people over 65 will almost double, according to Sandy Weinberg, a professor of entrepreneurship at Muhlenberg College in Allentown, Pennsylvania. "This growing market will require products and services that meet its needs," Weinberg says.

No one had to interpret these statistics for Lois Herbst. She left a secure job at a financial planning firm to launch Checks & Balances, Etc. in White Plains, New York, in 1988. Checks & Balances performs bookkeeping and recordkeeping chores for senior citizens, many of whom welcome the opportunity to delegate these tedious and time-consuming chores to others.

Herbst's bookkeeping service includes monthly bill-paying, checkbook balancing, income-tax preparation and medical-claim filing. "Processing insurance and Medicare and Medicaid forms is particularly bothersome for the elderly," Herbst says. "Just knowing someone is taking care of it amounts to an enormous burden off my clients' backs. They consider it money well spent."

Herbst's idea struck her when she was working as a financial planner and organizing clients' often chaotic financial records. "I saw a pressing need for someone to come in and straighten out all the paperwork in a senior citizen's life," she says.

Just spotting the need, however, didn't guarantee her success; Herbst also had an accounting background on which to build a solid business.

Getting clients wasn't half as difficult as Herbst thought. She's never had to advertise; word-of-mouth referrals have fueled her growth. Her first clients had worked with Herbst's former employer and were looking for someone to perform bookkeeping chores in their homes. They soon referred her to new clients. The key to receiving glowing recommendations, she says, was delivering fast, excellent service. "You're starting out with built-in trust when a satisfied client recommends you to a friend," she explains. "Because of the personal and confidential nature of the service, this is critical. It would have been a lot harder if I'd had to cold-call clients. Then I'd have to overcome resistance by giving references to prove that I was trustworthy and competent."

Herbst charges $35 per hour to work with clients in their homes. If they come to her, the rate drops to $25 per hour. "My rates are competitive," she says. "I charge what most bookkeepers do for performing similar services. Nobody can tell you what to charge. The idea is to come up with a figure that's fair and ethical and, most important, allows you to make a profit."

Herbst got started for just $5,000, which covered two phone lines; office equipment; a notebook computer, which she uses when she visits clients; and another computer for her home office. She saves a lot of money by working from home. "Most of my clients prefer that I come to them," she says. "Convenience is more important to them than saving money."

Just as Herbst watches over other people's finances, she painstakingly monitors her own books to ensure she's operating comfortably in the black. Thanks to a computer, a fax, a pager and an answering machine, she runs an efficient operation with the help of just one part-time employee.

Aside from a financial or bookkeeping background, Herbst says there are two other critical skills necessary to launch this kind of business. First, discipline is essential. "Since you're always moving from one client to another, it takes a highly organized and disciplined person to do this well," she says. "Accuracy is a must." Second, Herbst says, you have to enjoy working closely with people.

One of the advantages of running this kind of business, she says, is that the service is continual. "It's not a one-time service," she explains. "Bill paying and checkbook balancing must be done every month, like clockwork."

But this is just one of many profitable senior-service businesses. According to Weinberg, there are many other ways to cash in on this growing market.

Jackie Lent's Inward Bound Adventures in Bedford Hills, New York, is a perfect example. Where Herbst provides a practical service, Lent offers the same target market a service to fill its leisure time.

Lent began by designing travel tours for senior citizens looking for unique ways to spend their vacations. She carefully mapped out destinations and planned trips down to minute details. But unlike most tour directors, she avoided commonplace tourist attractions, instead taking groups to places that were off the beaten path. "My goal was to have my customers experience the place they visited rather than just see it," she explains. All her services are marketed to mature adults who have the time and the disposable income to indulge in such pursuits.

In 1993, Lent took her company in a new direction by organizing discussion groups on current events, politics, books and films. She marketed the service to the same audience that signed up for her tours. "They enjoy the intellectual stimulation that comes from airing opinions and listening to what others have to say," she says.

Lent stages weekly and monthly discussion groups, drawing 15 to 40 people. Once she chooses a topic, Lent negotiates the rental of a room in a conveniently located restaurant or coffeehouse and advertises the event. After calculating the per-attendee cost, she marks up the price by 15 percent to 20 percent, which is her profit.

She sets prices for her tours the same way. Once she knows her costs (group rates for plane fares, hotels, ground transportation, etc.) she marks the cost up by about 15 percent.

Lent had to attend to many tedious details to get her company off the ground. She spent $4,000 for a computer, a laser printer, a mountain of paper and two phone lines. More important was the time Lent spent on creative marketing, public relations and aggressive networking plans, which she learned on the job. "I knew nothing about public relations and advertising when I started this business," she says. "I learned by simply doing it."

Like Herbst, Lent works from home. She doesn't need an office because most of her time is spent traveling and organizing discussion groups.

To find customers, Lent publicized with a passion. She sent press releases to local newspapers, TV and radio stations and professional and community-service organizations, such as churches and chambers of commerce. Then she followed up with relentless telephone calls. "You have to create an interest by talking to anyone who might be interested," she says. "The key to it all is sincerely enjoying talking to people."

Herbst and Lent are just two examples of entrepreneurs serving this exciting market. Before you test your own business idea for senior citizens, Weinberg advises finding out, first, if anyone else has tried it. "It pays to invest the time researching someone else's success or failure," he says. "Either way, it's a great learning experience."

Bob Weinstein described how to start a concierge service in the October issue of Business Start-Ups.

For More Information

• Publications that serve senior citizens are wonderful sources of information about trends and business ideas catering to this market. Look at Modern Maturity, New Choices and Mature Outlook magazines.

• Recommended: a computer and a fast modem (28.8 kbps or 33.6 kbps), which will cost about $1,200 to $2,300.

• Mailing lists pertinent to your market will help you locate customers. Check out list brokers in the Yellow Pages. Warning: Make sure you get an "A list," which means the list has been tested and is made up of people from a specific market.

Contact Sources

Checks & Balances, Etc., 21 Copper Beech Cir., White Plains, NY 10605, (914) 761-3477

Inward Bound Adventures, P.O. Box 27, Bedford Hills, NY 10507, (914) 242-0919

Mature Outlook, 1912 Grand Ave., Des Moines, IA 50309-3379, (515) 284-2007

Modern Maturity, 601 E St. N.W., Washington, DC 20049, (800) 424-3410

New Choices, 28 W. 23rd St., New York, NY 10010, (800) 365-5005

Sandy Weinberg, c/o Muhlenberg College, 2400 Chew St., Allentown, PA 18104-5586, weinberg@muhlberg.edu