Baby Boomers own over 60% of all the small businesses (under 500 employees) here in the United States. Boomers are healthier and will likely work longer than prior generations. They still own more than 3.5 million businesses. They will need exit and transition those businesses over the next 20 years (that’s 175,000 transitions every year). But who will buy?
In the movie “The Perfect Storm” three different fronts combined to create a massive weather event. Similarly, there are three trends that are combining to impact our next generation business owners.
- The first front is Simple Math – Just as the boomer business owners hit their peak point with respect to reaching retirement age, the following generation’s birth curve takes a deep drop.
- The second front is Psychographic – Most boomers complain about the work ethic of the younger generations. The truth is every generation has had this same complaint. The reality is, the generations following the boomers were brought up in a very different economic environment. In most cases these generations have little interest in the 50+ hour work weeks that come with being a small business owner. It’s all about work/life balance.
- The third front is Sociographic – Boomers are not just leaving their businesses, they are also retiring from jobs in all walks of life. Corporate America (Big Business) knows and understands this. Big Business has always been able to outbid small businesses for employees. As Big Business vies for younger talent, they are implementing benefits that small businesses cannot hope to match.
The Perfect Storm leads to an inevitable conclusion, the largest business-owning generation in history is transferring to follow up generations that are poorly equipped and disinterested in taking over. It isn’t a pretty picture for an unprepared boomer owner. It’s not too late to prepare.
Source: The Exit Map® Advisor’s Guide, 2020.