Since they hit the ground in the mid-1940’s, the Baby Boom generation has been so large and powerful that they’ve shaped our world. As consumers, entrepreneurs, policy makers and voters, the effects of this unprecedented generation will be seen for years. What does this mean for entrepreneurs?
For many Baby Boomer entrepreneurs, the size of this generation meant that they started their businesses amid extreme competition. Boomers have worked their tails off to get where they are. Of course, there were casualties along the way that saw the competition thin out – tough economic times, labour shortages and aging owners have separated the wheat from the chaff over the last 40 years.
Now what? As the Baby Boomer entrepreneurs age, they are planning for their retirement and looking to exit their businesses. For most owners, that means “slowing down” a little and handing the reins to the next generation. Spend a little more time with family, travel a bit. Again, Boomers are forcing growth in warm climates demanding the condos, golf courses and adventures that they’ve worked hard to enjoy.
Working with entrepreneurs who want to sell their businesses, it’s our job to look at markets to create a forecast for our clients. With Baby Boomers currently between the ages of 52-70, there’s no need for a crystal ball to forecast the resale market for businesses.
“Build an ark – there’s about to be a flood” God to Noah
“We’re seeing a rush of people trying to sell their businesses. For some, it’s an emergency due to poor health but for others, it’s just time to move on,” says Travis Kellett, owner of Bridgepoint Business Brokers. “It’s no surprise. In Saskatchewan, over half of the business owners are over 50 years old.” (Demographic Profile of SME Owners, Industry Canada 2013)
What does this mean for someone thinking of selling their business in the next 10 years? “There will be a lot of businesses on the market and fewer buyers. This is especially true in Saskatchewan where we lost a generation in the ‘80’s and ‘90’s. There are fewer people with management skills who are looking to buy.” Kellett says they’re seeing business owners working harder and longer to make the sale or just shutting the doors. “Without a succession plan in place, entrepreneurs are holding on to their businesses hoping for the right buyer to come along. When that doesn’t work and their personal situation demands a sale due to poor health or burnout, business owners are resorting to fire sales or just folding. It’s not good for our local economy or their retirement plans.”
A solid succession strategy made years in advance of a planned exit always brings a better return. Travis observes, “Our clients get back everything they invest in a succession plan but not just in a higher selling price. We see that peace of mind that comes from a plan and that is invaluable.”