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The Baby Boomers and Small Business

The Impact Baby Boomers Have on Small Business Sales


 

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Increase in small business transactions

According to data from BizBuySell, an online business marketplace, the number of small businesses for sale is at a six-year high. In addition, they reveal the total number of business transactions completed has increased and the median sale price for small businesses has increased twelve percent when compared to the numbers of approximately one year ago.

Why the increase?

Obviously business owners choose to sell for many reasons. Industry experts, however, attribute the majority of these rising numbers in the small business area to the Baby Boomer generation who is reaching retirement age.

Bankers and business brokers specifically have noted an increase in business owners in their “golden years” choosing to sell and let the next generation take over their small business. Over 26% of the population is in the Baby Boomer generation, according to the Pew Research Center. This means many of these Boomers are planning their exit strategies now.

Economic impact

Some industry experts also attribute the number of small business transactions to the economy. They feel as the recession diminishes and the economy prospers, many Boomers who have built their business for decades are preparing to sell while the economy is on an upswing and while their books are appealing to buyers.

Boomers in the ‘90’s

Further, those Boomers who purchased businesses in the 1990’s, which were good years in terms of business, averaged about forty years of age at the time. Now, two decades later, they are planning retirements.

Good years, good books

Those Boomers who considered selling several years ago were forced to continue working. When the economy hit the recession, most did not want to chance a retirement. Since then, these business owners have been able to piece together several good years. Their financial books look better than they have in years, so many feel now is the opportune time to cash out.

Future projections

According to Pew Research study population projections, 10,000 Baby Boomers will reach retirement age every day for the next fourteen years. For the business world, this means many more businesses are set to hit the market in the next years.

With the economy thriving, this may also be the ideal time to purchase a business. The SBA has increased its lending over the last several years, allowing many to have the financial backing they need in order to fulfill their dream of owning their own business.

 

By: Kimberly Deas, Murphy Business & Financial Services