A Social Transition: Family Businesses Generational Pass
Baby boomer business owners, today, account for 40% of all small businesses and franchises in America. These family owned, small businesses are at the center of the local American economy. And while these businesses are thriving more now than ever, the reality is that the generation who built these businesses is disappearing. Not from existence necessarily, but they are retiring, and they’re transferring things to the next generations hands.
This would be great, fresh blood is able to come in, renovate a bit and small businesses are kept afloat. Except this simply isn’t the reality most members of the younger generations want. Millennials, in particular, desire flexibility and the chance to set their own path, they rarely want to take over the family business.
Today 58% of small business owners say they have no transition or succession plan at all. So what’s going to happen, are all of these businesses, many of which have been in their communities for years, going to disappear? No, while certainly some will close, it seems the reality is many more will be sold.
Baby boomers, like most Americans today, have few plans for retirement or saving altogether. While only 55% of baby boomers have any retirement savings, inflation and expenses make it so that even those who have saved likely haven’t saved quite enough. This is where selling reveals itself as a vital option for small business owners.
Who are the people buying these businesses then? Baby boomers and business owners at large are known to be headstrong and proud of their businesses, they’re certainly not going to hand it over to just anyone. Interestingly enough the answer seems to lie with Millenials, the same generation that won’t take over their own family’s business.
In the pursuit of becoming one’s own boss, there are few more viable options than buying out an established business. Boomer-owned businesses tend to be highly established, already profitable, and have a high quantity of highly loyal customers. There’s no guarantee these benefits will carry over to new ownership, but for many it’s better than starting at scratch.
So ultimately, the baby boomers’ businesses will be moved down the generational line, just not within their own families. This will, again, keep businesses afloat, add new perspectives, and keep the economy healthy. It will also give some baby boomers a means to retire in the modern world where that is no easy feat. It’s certainly not the only option small businesses will take moving forward, but it’s the one that best preserves the same businesses that built America today.
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