Where Will All the Small Businesses Go?

What would the small business landscape look like if over one million small businesses disappeared? Get ready, it’s about to happen.

I write and speak frequently about the passing of the entrepreneurial generation. Driven by competitive pressures to succeed, the Boomers became small business owners in unprecedented numbers not seen since. They now account for about 2/3 of all the small employers (under 500 workers) in the United States.

The two generations that follow, the Xers and Millennials, don’t have the capital, the material ambitions, or the need to chase the Boomers into small business. For a free download of my ten-article series on this transition, go to The Boomer Bust and use the password “Woodstock.”

For one moment, let’s just review the numbers. In 2018, all Boomers will be between 54 and 73 years old. Eight thousand a day will be turning 65. The Xers who can buy their businesses will be turning 45 only at a rate of 4,000 a day. Nothing can be done to change this gap.

closed doorsJust over 7% of Boomers own companies with employees, or about 5,500,000 small businesses. That equates to about 215,000 owner retirements annually. If the Xers were willing and able to buy businesses proportionate to their numbers (and they are neither willing nor able,) we will still have over 100,000 businesses a year without buyers. That is 300 businesses a day closing, seven days a week, 52 weeks a year, for ten years.

I’ve been discussing this demographic tsunami since 2007. A few other writers are beginning to realize how big this shift will be. There is no cure. We can’t make people who aren’t interested in a Boomer lifestyle into workaholics. We can’t fund budding entrepreneurs who  have no means to secure traditional financing. We can’t change the sheer volume of retiring owners.

The term “exit planning” is spreading fast, and with good reason. It is going to be the hot button for millions of small business owners throughout the rest of this decade and the next. If your plan is to work until you just don’t feel like it anymore, and then expect to have someone jump at the opportunity to take over from you, think again. The market will be crowded, and only the best-run small businesses will find a buyer.

This week we were reviewed by Martin Zwilling in the Huffington Post. Thanks Martin!  Hunting in a Farmer’s World: Celebrating the Mind of an  Entrepreneur is a nominee for Best Small Business Book of the Year. Please support us, and entrepreneurs everywhere, by taking a moment to cast your one-click vote here. Thank you!

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Categories: Business Perspectives, Economic Trends, Entrepreneurship, Exit Planning, Exit Strategies, Selling a business, Strategy and Planning, Top Blog Posts... Bookmark this post.

One Response to Where Will All the Small Businesses Go?

  1. Rich Schell says:

    Hi
    Congratulations on your award. I ran across your book and your IBPA award in the newsletter I am one of the relatively few lawyers around with a foot in the publishing and food and ag entreprneurship camps. I blog at http://schellacres.typepad.com/ and your book would be a natural to review if you are interested in having a review on the blog. Best Success with your book, I think it’s a crucial insight about temperament–can’t make cows hunt, can’t make lions graze (happily).
    Best
    Rich Schell

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