The business landscape is changing dramatically. Owners of small businesses across the United States look extremely different than those a decade ago. Millennials are now at the forefront of these companies, rapidly supplanting the baby boomer generation.
Earlier this year, the BNP Paribas Global Entrepreneurs Report 2016 indicated that millennials are launching businesses at twice the rate of baby boomers. This hasty growth is matched by the rise in household income among this age bracket, with a quarter of households with an annual income of over $500,000 headed by millennial breadwinners.
Times are changing, with a new breed of business owner quickly outstripping previous generations. Retiring baby boomer owners are set to sell assets worth up to $10 trillion within the next two decades, representing the value of approximately 12 million privately owned businesses. Evidently, the coming years are set to be a prime selling market for baby boomers with an eye on retirement (especially for those that plan ahead and act quickly).
Undoubtedly, there are some that might see this generational shift as problematic. Should you be worried about the difference in approach a millennial buyer would bring to your small business? Evidence suggests a millennial owner would make significant changes on a company’s existing structure, but this is not necessarily a bad thing:
This is not to say that businesses owned by baby boomers are backwards. There is plenty of evidence to suggest that while many boomers will be selling their companies in the coming decades, a significant number of these will be to investors in the same generation. Nevertheless, there is a pressing need to consider the future, as one day the current millennial generation will represent a majority of small business owners in the country.
The next 5-10 years represent an excellent opportunity for baby boomers considering retirement to recoup substantial capital by selling to millennials (or any buyer type for that matter). Stereotypes surrounding this generation’s ability to drive forward existing small businesses are being eradicated. Indeed, Chase for Business’ survey in December 2015 illustrated that 68% of millennial owners consider growth in their business a primary concern, compared to only 53% of baby boomers.
This focus on growth is key, as it indicates that many prospective millennial buyers would be interested in taking on an existing company and enhancing it, as opposed to starting from the ground up. This opens up opportunities for those looking to sell in the coming years in securing excellent returns. If an aspiring owner sees potential in pushing forward an active small business, they can spend to match this potential.
Many holding off on selling might be reluctant to break their emotional bond to their small business, wary of how it could change under completely different leadership. However, selling to a millennial owner could be beneficial in this regard, as these young adults will crave coaching, especially if this is their first foray into business ownership.
While millennial owners will undoubtedly introduce new ideas that they are more accustomed to (social media, digital technology, diversified workforces), they will also have a desire to learn and understand the heritage of their investment. This means baby boomers stepping aside can still impact the direction of their former company in the early stages, setting it up for sustained prosperity in the long-term (and maintain the legacy they have built into the business).
Clocks will continue to tick forward and with them a new generation of owners is emerging. Instead of dreading this imminent transition, there are numerous benefits, both in terms of company value and securing its legacy, that make selling to millennial investors a practical option for outgoing baby boomer business owners.
Carl Doerksen is the Director of Corporate Development with the Generational Group.
© 2016 Generational Group, LLC All Rights Reserved
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
DealForce, LLC’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables DealForce to serve you more efficiently and makes it more convenient for you to do business with Generational Group. DealForce is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.
Success, you have been added to our list.
it all started with a conference.
start your story today,
speak directly with one of our senior advisors +1-972-232-1121