By 2045, Baby Boomers will have sold or passed on over $72 trillion in wealth. At least $68 trillion is expected to go to Gen X or Millennial inheritors. Were that wealth divided evenly among the 2 generations’ population, each person would receive $220,000. A large portion of that wealth is tied to the 2.3 million small businesses Boomers currently own.
1 in 8 business services, retail stores, and construction companies in the US are Boomer-owned. Boomer businesses employ 25 million people and support millions more vendors, suppliers, and gig workers. At the same time, the youngest Baby Boomer turns 58 this year. 10,000 Baby Boomers retire every day. When Boomers retire, what becomes of their businesses?
Some will invariably go to the Boomer’s children, but that’s not a guaranteed outcome. 58% of small business owners have no transition plan. Millennials are less likely to take over the family business than prior generations. This is because they have more career choices than their parents did at the same age. Many also have different priorities in that they want more flexibility and independence from their jobs.
The sad truth is that many small business owners will need to sell in order to fund a comfortable retirement. 45% of Boomers have no retirement savings, and those who do may not have enough. Over the last 20 years, healthcare costs for retired couples have nearly doubled. Since 2004, the cost of long term care has also grown by 60%. Needing care is a sad fact of life when most people reach old age.
Selling a small business isn’t always easy. Not emotionally, and not logistically either. Many businesses are too small for private equity funds to take notice, and mergers worldwide have fallen in recent years. Yet for Millennials who are ready to become their own boss, Boomer-owned businesses are a good investment. Many are well established with distinct brands and loyal customers. It can be easier to buy an existing business than it is to start a new one. Boomer-owned businesses have already proven their ability to bring wealth.