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Demographics of Small Business Buyers

9/23/2012

1 Comment

 
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We think of small business buyers as young aggressive types out to make their fortune. This study of US Census data shows a different story. The data is a comparison of the change in the number of business owners by age from the year 2000 to 2010. 

We had thought that at this point baby boomers would be selling their assets to liquidate for retirement. The net result would be a buyer's market as an over-supply would drive down prices. If this was happening we would see the data showing fewer older small business owners and more younger ones. Just the opposite has happened.

Many baby boomers today are both financially unable to retire and rapidly becoming unemployable. They are people with some retirement funds and many business skills; but with a serious problem. They are seeing buying a business as the solution. Since the start-up failure rate is so high, that is rarely seen as desirable. Buying an existing independent business with an established history or buying a franchise with an established success rate are both viable options.

What the census data in the graph is telling us is the baby boomers are in the market selling their businesses or franchises to other baby boomers. Baby Boomers are the current market's primary business buyers. New tools are now available for both the business buyer and the business seller we are seeing.

Many business sellers are not aware of the dynamics of how their business might be valued. We have seen where an understanding of the value drivers involved can more than double the business value annually. When this is representing the core of your retirement funding, what else could be more important? This is the case for Exit Planning.

Business buyers must understand both the seller's business model and their own Personal Business Model. A business doing well in the seller's hands doesn't mean it will do well in the Buyer's hands. The new book, Business Model YOU, takes any individual through the process of developing and understanding their own Personal Business Model.

Lastly, both sides of a business sale are complex and there is little room for an aging baby boomer to make mistakes. Getting the assistance  of a skilled business broker will be one of the best strategies possible. Our brokerage is centered around the Executive Advocate philosophy described on this website. Contact us to learn more how we can help.
1 Comment
Ulrich T. Urhan
9/23/2012 07:43:43 am

EXCELLENT, regards, Ulli

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    Author

    Bob Fariss writes about the issues facing Executives in career development. He teaches Business Model Thinking  and also represents individuals with an entrepreneurial flair seeking to sell, buy, or start-their own business.

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