Baby boomers, who own 40 percent of all small businesses and franchises, make up a significant portion of the market. This is impressive enough, but 75 percent of these businesses are profitable, and 35 percent have been in operation for more than 10 years.
Consequently, baby boomers’ businesses are some of the most significant small business markets today. What happens when all these business owners retire? Ten thousand baby boomers retire every day, and simple ideas like handing down their businesses to their children are suddenly not so simple.
Today’s younger generations have little interest in taking over their family businesses, citing following their own paths, pursuing different interests, and living more flexible lifestyles as the reasons why. So, what will baby boomers do? For most, the answer will be to sell to people who may not already be connected to the business.
Baby boomers who have saved, only 55 percent of the generation, will likely still have to supplement with some other source of money to make retirement comfortable. This reality makes selling an incredibly appealing prospect, but it’s not always an easy process. Mergers are less common, and many small businesses are too small for larger ones to consider.
One solution comes from members of younger generations, particularly millennials, who in their pursuit of an independent schedule and individual path are more likely to buy a business and become their own boss. While the young workers of today may not want to take over their families’ businesses, that doesn’t mean they won’t buy another.
Selling a business to a young entrepreneur can give baby boomers satisfaction that someone who cares and wants to make something of themselves will take over their business. It keeps small businesses in people’s hands (rather than merging with a large corporation) and ensures that the business is not going anywhere. It is one of many solutions for baby boomer business owners, but it’s possibly the most enticing.
This is an interesting solution to the predicament of boomer business succession. Boomers need to retire, and they need someone who they can trust to take over their businesses. The sale of small businesses owned by baby boomers is just one example of the massive influx of resources that will be transferred to younger generations. And this creates an opportunity for talent development professionals to step in and offer insights to new business owners about how to manage organizational culture, transfer institutional knowledge, and engage the workforce.
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