Over the next 10 years, 53% of business owners in the Baby Boom generation intend to exit their business.
If that includes you, you might find these facts interesting:
- Boomer business owners fuel more than half our G.D.P.
- If each business is on average worth a million dollars; we’re talking over $4 trillion in potential wealth transfer.
- If only 25% of businesses sell as planned, the US will leave $3 trillion in wealth on the table.
- This massive turnover means about half of the US job base will go through a difficult transition that historically only one in four businesses successfully executes.
Our historical tendency as a group to make powerful impacts will continue as we sell our businesses. We can make that impact a positive one by capitalizing on our unique generational perspective.
How We Think Compared to Other Generations
One business broker characterizes Non-Boomer Prospective Buyers as:
- Young – probably under 40, predominantly male
- In a hurry, underestimating the time and complexity of the purchasing process and anxious to get on with it (“there’s an App for that” mentality)
- Inexperienced with the buying process, possessing weak negotiation skills
- Low on money, and doesn’t seek out expert help such as CPA, brokers or other advisers because they see themselves as “smarter”
I’d offer a second set of characteristics to help you understand your potential buyers and how you can deal effectively with them in the selling process.
Pew Research Center asked individuals in each generation group “what makes your generation unique?”
Here are three of their findings that influence the selling process.
1. Each generation thinks they’re “smarter”
SO: Be smart but also be WISE!
You know what brings value in your business so make it crystal clear with complete, well-analyzed information in your company story.
Be wise by using the same great skills with your buyer that you use with your customers. Show respect for their experience and knowledge regardless of age or generation. Think of harmonies not comparison.
In multi-generation family businesses, show you value the perspective and education of the next generation. Invite them into strategy or other business discussions that let them offer their views and hear how you think.
WHY: Because we all think we’re smarter than other generations, it’s easy to fall into a competitive stance of who knows more or what experience counts most.
In family owned businesses we fight over who has the experience or knowledge and who should be teaching whom. This often centers on technology and marketing where the tech divide (below) shows up.
Yet, the very sustainability of the company upon your departure will depend on other smart people who see new possibilities.
2. The great “Tech Divide” truly divides us
SO: Assess the ability of your business to successfully compete beyond your leadership.
Are the systems and technology in place to reach your markets and customers? What about your ability to stay compliant in the most cost-effective ways? Or are you relying on “how we’ve always done it”?
WHY: Technology distinguishes the divide between pre and post 1965.
The lack of tech tools can reduce the value of a company (from systems to web-based marketing) and its salability.
When younger buyers see additional investment will be needed to bring the business into the 21st century, they’ll likely have two responses: 1) reduce the offer price and/or wonder what else in the business is out of date and 2) believe they are, in fact, smarter than you (a hallmark of Millennials is their confidence and openness to change).
3. The Millennials’ work ethic doesn’t measure up to Ours.
SO: Re-think your interpretation of ‘work ethic.
Millennials’ work habits are fueled by service to a higher purpose. Describe how your company and its products, services, and key relationships provide a benefit beyond profit.
What’s been the mark your company has left on the community, your people, or maybe the advancement of knowledge?
WHY: When you find the mutual interest of higher purpose you’ll bridge the generation gap.
A younger generation cannot hear the ‘what you have to sell’ before they understand the ‘why it matters.’
What it All Means
With an average of 24 years running a business, Boomer sellers have significantly more general business experience than younger generation buyers.
Boomers, with their work ethic, value-orientation and ‘smarts,’ have the foundation for building a strong company story that will appeal to multiple younger generations.
Be thoughtful and capitalize on your distinct characteristics (and advantages) when thinking about the prospective buyer pool. Stand in the shoes of the next generations — understand their value drivers, e.g. Higher purpose? Turn Key? Technology edge? Opportunity to build and innovate on a solid platform?
And then:
- Create a compelling company story based on a value proposition from your buyer’s point of view.
- If you plan to sell internally, lead from the belief as Janis Joplin said, “None of us is as smart as all of us.”
- Be prepared to provide owner financing to undercapitalized younger generations.
What do you think: How has your world view influenced your thinking about leaving your business? What preparations are you making to capitalize on your boomer strengths? Share your thoughts in a comment below.