The Boomer Business Bomb
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Baby Boomers account for 40% of small business and franchise ownership in the US. This infographic explores what the consequences are for America as generations shift.
Boomer-Owned Businesses Are Thriving
- Baby boomers own 2.3 million small businesses
- 35% have been in operation for 10+ years
- 3 in 4 are currently profitable
- Top Industries For Boomer-Owned Businesses
- Business Services: 13%
- Retail: 13%
- Construction/Contractor: 12%
- Residential/Commercial services: 9%
- Food and Restaurant: 9%
- Americans rely on Boomer-owned businesses to succeed
- Boomer-owned businesses employ 25 million people
- Up to 1 in 3 Americans rely on income from Boomer-owned businesses
- Tens of millions more are dependent on their existence and success
- Venders and suppliers
- Freelancers and gig workers
- And more
- Boomer-owned businesses employ 25 million people
10,000 Baby Boomers retire each day
What Happens When Boomer Business Owners Retire?
- Millennials are less likely to take over the family business
- Wide array of career choices that never existed for their parents
- Desire for greater flexibility and independence from their jobs
- Gravitate toward jobs in tech, healthcare, media, and operations
- 58% of small business owners have no transition or succession plan
- 75% say they don’t have a plan because they enjoy running their company
- Many small businesses owners will need to sell to fund their retirement
- 45% of Boomers have no retirement savings at all
- Those who have saved, may not have enough
- Over the last 20 years, healthcare expenses for a retired couple increased 88% — reaching $300,000
- Since 2004, the costs of long term care options has grown up to 60%
- Selling a small business may not be as easy as expected
- Many businesses are too small to be on the radar private equity funds
- In 2018, private equity firms held $600 billion in uninvested capital — a 34% increase from a decade earlier
- In 2019, global mergers and acquisitions fell 16% — reaching the lowest quarterly volume since 2016 as uncertainty around COVID-19 grew
- In 2021, US mergers and acquisitions recovered, growing 55% and reaching a record $2.9 trillion
- Golden Years, Golden Opportunity
- Boomer-owned businesses are a good investment
- Established and profitable business
- Strong local brands and loyal customers
- Provide high-demand services
- Millennials are increasing leaving corporate jobs to become their own bosses
- Buying an established business may be a better option than starting one
- Many Boomers don’t want to sell to just anyone — They want a reliable successor who will take good care of their business
- Has needed skills and experience
- Will keep existing employees
- Boomer-owned businesses are a good investment
By 2045, Baby boomers will sell or pass on an estimated $72.6 trillion in wealth — That’s 2X as much as a decade ago and 3X US GDP
The Great Wealth Transfer
- The Baby Boomers, upon their death, are expected to transfer an estimated $68 trillion to their adult children
- Charities are expected to receive $11.9 trillion — 14% of the total wealth transfer
- Divided equally among the population of Gen X and Millennials, that’s and average of $220,000 per person
- This collective inheritance is expected to transform young consumers into
- Real estate investors
- Buyers of big-ticket items
- Clientele for financial advisors, banks, and more
- Home ownership and small businesses are Baby Boomer’s greatest sources of wealth
- How this wealth will impact future generations is yet to be seen
The Economists You Should Know
According to the Influence Ranking Engine at AcademicInfluence.com
- Paul Krugman
- American economist and columnist for The New York Times
- Joseph E. Stiglitz
- Recipient of the Nobel Memorial Prize in Economic Sciences
- Thomas Piketty
- French economist, Co-director of the World Inequality Lab & World Inequality Database
- Esther Duflo
- Professor of Poverty Alleviation and Development Economics at MIT, and Co-founder of the Abdul Latif Jameel Poverty Action Lab
- Abhijit Banerjee
- Indian-born naturalized American Ford Foundation International Professor of Economics at MIT
- Thomas Sowell
- American author, economist, and senior fellow at the Hoover Institution of Stanford University
What will the greatest wealth transfer in history mean for the future of business ownership?
Sources:
https://www.guidantfinancial.com/2020-small-business-trends/baby-boomer-business-trends
https://www.wolterskluwer.com/en/expert-insights/2022-trends-in-us-mergers-and-acquisitions
