American Business Brokers - June 2020

American Business Brokers & Advisor Founder & President PROFESSIONAL INTERMEDIARY & MARKET MAKER FOR PRIVATELY HELD COMPANIES Author of ‘The Art of Buying and Selling a Convenience Store’ & ‘Selling with Certainty’ Involved in the Sale of 800+ Businesses Advisor • Consultant • Speaker

JUNE 2020

WWW.TERRYMONROE.COM

800.805.9575

The Baby Boomer Business Bubble HowWill Your Business Weather the Upcoming Storm?

“Because of the surplus of sellers and shortage of buyers, businesses will sell for far less than they have in previous years.”

To my knowledge, nobody is talking about something I consider to be a looming crisis. I know everyone is tired of hearing about the latest crises (I know I am), but this one has been brewing for a long time, and I want to make sure all of you know about it. There are approximately 77 million baby boomers (people born between 1946 and 1964) in the United States, and I’m one of them. Approximately 10,000 of these baby boomers are retiring daily — and I’m not one of them! A large portion of the baby boomers who are retiring are business owners, and they will eventually exit their business by either passing it on to their family or selling it. There’s nothing wrong with that in and of itself, but here is where the problem arises: As all of these baby boomers begin selling their businesses, there is a good chance there won’t be enough buyers. You heard me right — there are going to be more sellers than buyers at the rate baby boomers are retiring and exiting their businesses. The next generation is not as entrepreneurial as baby boomers. They don’t seem to have the same desire to own and operate their own business like we do. As we all know, business is about supply and demand. If we are in short supply of one kind of business, the demand goes up. If there are too many of one kind of business, the demand for that business goes down. As time goes on, a lot of baby boomers will decide to exit the business, but there won’t be as many buyers. Because of the surplus of sellers and shortage of buyers, businesses will sell for far less than they have in previous years.

To top things off, after the COVID-19 pandemic runs its course, even more business owners are going to want to sell. They will be tired of dealing with all of the chaos the coronavirus brought on. However, because of the uncertainty that the pandemic has brought to the market, even fewer people will be interested in buying or starting businesses. Please understand that I am not trying to be alarmist or pessimistic. I just want to be upfront and honest about what I’ve perceived about the market lately so we can all be informed and approach solutions to this issue pragmatically. The solution is what the Boy Scouts’ slogan has been for years: “Be prepared.” Be prepared by knowing what your business is worth and thinking about the future. Is your family interested in taking over your business? What does the future look like for your business? Does it have a long horizon ahead of it, or could it be the next victim of the likes of Amazon or Netflix? It’s a lot to think about, so start considering your options as soon as you can. For additional insight into these and other questions, go to TerryMonroeBooks.com for your FREE copy of “Selling with Certainty: Straightforward Advice for Cashing In on the Full Value of Your Business.”

–Terry Monroe

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