Hey Boomer, Who’ll Mind Your Store?
December 12, 2019 | Contributed by: Neal Polachek
Sandy Lohr who runs one of the mainstay companies in the local space — MatchCraft — cites me as the source for a stat that she often quotes — that by 2025, 75% of local business owners will be millennials. I believe this will be true and it means that we’re going to see a substantive generational shift in business ownership in the coming decade.
In fact, by the time we’re ready to turn the page on the decade of the ’20s, virtually every baby boomer will be well into retirement age. This piece from CNBC offers some additional color on the topic. Some facts they surface include:
- Boomers own 2.34 million small/local businesses
- The 2.34 businesses make payroll to some 25 million employees and touch millions more via vendors and suppliers
- 58% of boomer owners have no succession or transition plan.
Localogy-LSA’s Modern Commerce Monitor™️ makes clear what we all know intuitively — younger business decision-makers have an “app-first” approach to running a business. We developed a “Cloud-based Services Buyer Index” within MCM that shows that not only do younger decision-makers favor apps, so do businesses that say they are in growth and expansion mode and have employees. They also fret over the things they can control, like acquiring customers, delivering great customer experience, and pursuing new opportunities.
No Plans, No Time
Imagine you’re a business owner that is staring down the barrel of retirement in the next decade, but you have no plan. And maybe you’ve spent the last 20 or 30 years building your business so that someday, someone might pay you for your hard work. The problem is, I don’t think many of my peers — these boomers — are really thinking about what a sale of their business might look like in the coming decade. Here are some things they should be considering.
- Are the businesses’ processes on paper or in the owners’ heads?
- Are any employees potential buyers? And if so, have there been any conversations with them?
- Are they updating marketing strategies and tactics to meet the demands of today’s modern consumer?
- Are they updating their digital presence so they can be found?
- Are they using technologies that help them drive a bigger bottom-line?
Tech as an SMB Value Creator
My best guess is that few business owners are doing enough across any of the above dimensions, let alone all of them. What they don’t seem to comprehend is that modernizing a business today will pay off tomorrow.
Think of it like a house sale. Will a run-down house with antiquated plumbing and roofing command top dollar? Doubt it. Likewise, will a small business that is operating on paper and pencil command top dollar from a potential buyer? I doubt it.
Many technology vendors to small businesses can go on at length about their product features, e.g., storage capacity, speed, efficiency. Yet few are communicating the importance of modernizing a business as part of a strategy for improving the value of that business on the eve of an exit.
While my dentist Dan would love for a big private equity company to come along and write him a large check, the chances of that happening are slim. Yet to his credit, dentist Dan has been on a gradual path of modernization and updating his practice so that he’ll be ready when the time comes to exit. And the check will be larger as a result of his preparation.