Are You Ready to Sell to the Next Generation?
Clare Price
Marketing System to Accelerate Value Creation | Marketing Solutions for Succession Planning from Three Months to Three Years || Add a Fractional CMO to your Exit Planning Team to Drive More Value Faster
It’s been called the Silver Tsunami. That’s the number of Baby Boomers who are ready to sell their businesses and move to the next stage of their lives.?
According to the North Carolina Employee Ownership Center (NCEOC), baby boomers own half of the privately held businesses with employees in the state: 78,757 business with owners aged 55+ providing 879,000 jobs and putting $165 billion into the local economy. That’s a lot of economic wealth and prosperity for the North Carolina region.
Yes, Baby boomers are selling or want to sell. But they aren’t buying. Potential buyers for these businesses are coming from the Gen X (41-56 years old), Millennial (25-40 years old) and increasing even young Gen Z (9-24 years old) entrepreneurs.
“The last few years have seen a shift from the plurality of small business owners who are Baby Boomers (41%) to those who are Gen X (46%). Right now, Millennials make up 13% of small business owners, 1% are Gen Z, or “zoomers,” says Guidant Financial in its small business trends survey for 2021.
These buyers want something very different from what many baby boomer business owners are prepared to offer.?
“Businesses that are selling were relevant 30, 40 years ago. And if those businesses have not evolved, and if they don't continue to evolve, they won't have a business to sell.
“As a seller, you have to think of the next generation. Who is going to buy your business and what will make it appealing for the younger generations who are looking to buy and get into business?” says Van Daughtry, president of Van Daughtry Consulting, Raleigh, NC.
Attracting that next generation buyer will make the difference between a successful exit and a well-funded retirement or simply shutting the doors after 30 or 40 years of hard work and walking away with nothing.
Sadly, that is the case with too many baby boomer business owners. “About 75% of the businesses that go to market today are not going to find a buyer,” says Neal Isaacs, managing partner of VR Business Brokers, Raleigh, N.C.
Isaacs’ statement is backed up the NCEOC which notes that 1 in 3 business owners over 50 have a hard time finding a buyer: “The vast majority (over 85%) of NC business owners do not have a succession plan in place, and many are finding it hard to find a buyer when they are ready to sell. As a result, some of these companies will quietly close down.”
What Do Next Gen Buyers Want?
Preparing to sell your business to the next generation of buyers means taking a hard look at how the business presents itself to the market. In real estate it is called curb appeal. It is equally applicable to established companies looking to get the highest valuation for their business.
A buyer expects profitability and a strong existing customer base. That’s the starting point.
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Next Gen buyers are also looking for:
Why is having a digital first turnkey business so important to selling your business??
In a word -- competition. “Business sellers are facing a smaller pool of buyers. The big question they face is how do you stand out? How can I make myself unique in a crowded market?” says Mike Leannah, principal of Business Value Strategies, Raleigh, NC.
“I tell my clients that the decisions you and I make when we position this business will determine the size of the buyer pull. The best-case scenario is when you have many people out there, because having only one, that's finding the needle in haystack, but if you've positioned your business to be as attractive to as many people as possible, then the odds go up that will sell and it will sell for a good market price,” says Daughtry.?
Octain Growth Systems specializes in helping business owners increase the value of their businesses prior to sale by creating a modern brand, website and digital marketing strategy in 90 days or less.?
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