A new generation of entrepreneurs has led to new business models, embrace of FinTech and a slew of other trends among the small business community. But according to one entrepreneur, there’s another phenomenon that’s shaping the SMB landscape in the U.S.
In a news article for Forbes, Jason Duff, CEO of COMSTOR Outdoor, which provides advertising and media solutions to other businesses, said baby boomers are selling their companies to millennial entrepreneurs — and that’s a good thing.
Duff cited research from Securian, released last year, that found small business owners often don’t have an exist strategy for their companies. Nearly three-quarters, according to the survey, said they don’t have an exit plan despite more than half (54 percent) planning to leave the business in 10 years due to retirement.
“We have a succession crisis,” Duff wrote. “But it doesn’t have to be that way ... Instead of just letting businesses close down, we need more millennials who can identify these opportunities, buy into them and grow them.”
Many baby boomer businesses don’t have debt, he said, while the companies have a proven business model, an established clientele and a solid track record with both customers and their financial service providers. Selling to a millennial business owner means the previous owner can stay on to help the new owner and reduce transfer-of-power friction.
“On top of that,” Duff said, “you might not even need to go to the bank, and the seller may be the one financing the sale of the business.”
The opportunity is vast: According to statistics from the California Association of Business Brokers (CABB), baby boomers that retire will sell off bequeath assets worth a combined $10 trillion over the next 20 years. Those assets are held in 12 million small businesses, and more than 70 percent of those companies are expected to change ownership.
That leads to the sale of nearly 12 million SMBs over the next 10 to 15 years, researchers said.
“Planning ahead will enable business owners to achieve the best transaction possible during this boomer-induced wave of business sales,” the CABB said.
Duff of COMSTOR Outdoor wrote that there are a few ways millennial entrepreneurs can get involved with this trend of taking over a local business. They can ask their local Chamber of Commerce about any planned business sales and also work with local CPAs, who might be aware of plans for local business owners to sell their companies. Local real estate brokers, Duff added, can also be a key source of this information. Millennial entrepreneurs should also work with local community bankers to establish a relationship that will help to ease the transaction of business ownership, he said.