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4,076 viewsSep 29, 2017, 09:00am
Baby Boomers Are Selling Their Businesses To Millennial Entrepreneurs, And It’s A Brilliant Idea
Forbes Agency Council
Jason Duff CommunityVoice
Forbes Agency Council
CommunityVoice
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POST WRITTEN BY
Jason Duff
Founder and CEO of COMSTOR Outdoor, innovating and supporting success on Main Street and in the small business community.
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A few months ago, I opened my local newspaper to a complete surprise. My electrician, Gary Thompson, who had built up a well-respected business over 65 years, was shutting everything down and retiring. No one was taking over his business.
Just like Gary’s other customers, I now needed to find a new electrician for my properties. As I was calling up potential vendors, I couldn’t help but think that this could have been an incredible business opportunity for a motivated millennial entrepreneur! To have all of the equipment, the buildings, the name, the licenses – all of those things were right there for the picking at a huge discount.
Gary is not the only one in this position. Experts estimate that millions of baby boomer entrepreneurs will close or sell their business in the next decade. A 2016 survey of small businesses in the United States indicated that 72% of small business owners don’t have an exit plan and 54% intend to leave in 10 years. We have a succession crisis.
But it doesn’t have to be that way. A few months ago, a local furniture store in my town was closing because the owner had worked for 45 years and couldn’t find anyone to take over. A young couple found out about the opportunity through Facebook, purchased it and kept its iconic name while revamping the business.
Instead of just letting businesses close down, we need more millennials who can identify these opportunities, buy into them and grow them. These baby boomer businesses often have no debt, loyal customers and tested and proven business models. The person selling the business is also often willing to stay on as an advisor since they spent their entire life building that business. On top of that, you might not even need to go to the bank, as the seller may be the one financing the sale of the business.
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All in all, it’s a win-win opportunity: You can hit the ground running as an entrepreneur, and a baby boomer can retire with an ongoing annuity.
But how do you find a baby boomer willing to sell their business when many of these businesses aren’t listed publicly? Here are seven ideas to help you get started.
1. Local Chamber Of Commerce
Bridging the community and businesses, the local Chamber of Commerce offers a wealth of information and contacts. News of any possible sell-off spreads quickly among business circles, especially the local chamber. The chamber will most likely also have local business brokers who you can talk with or will even offer business brokerage services.
2. Local CPAs
By virtue of handling tax returns and financial statements, a chartered professional accountant (CPA) is a trusted advisor to many businesses. As such, a CPA may be aware of a business that’s going through a transition, such as a divorce, health issue, change in goals, and so on. Having access to the client’s business information, the accountant can likely provide a fair business evaluation as well. Make sure the CPA has the proper certifications and is able to provide unbiased, impartial advice about the business’s financial condition.
3. Local Real Estate Brokers
The most direct signal of a business for sale is if its real estate is up for sale. Real estate brokers are a good source of leads in this regard. They would be motivated to help you close the sale since that also means they keep receiving a rental payment or get a sales commission. Even better, look for a real estate broker who has business brokering experience so that they can help you assess if the business is a good deal.
4. Local Community Bankers
Building relationships with local banks and mortgage companies, especially community banks, is an excellent way to identify and build a deal flow. Institutions with local control have a vested interest in seeing the community succeed. They can often customize loan terms, accept greater risks and, in the case of a foreclosure, see that failed assets transfer to new investor/owner as quickly as possible. When you have a relationship with your local banker and mortgage company, you can be first in line to buy a distressed asset at a deep discount, fast.
Federal Deposit Insurance Corporation (FDIC) statistics show that community banks lent 43% of small business loans in 2016. When talking with a local bank, see if they have Small Business Administration (SBA) loans which have a lower down payment.
5. Business Brokers
If buying a business sounds too complicated, work with a professional. Business brokers specialize in facilitating the buying and selling of businesses. Filter based on track record and location. The largest business-for-sale site, BizBuySell.com, has a broker directory that you can use to search for local brokers.
6. Go Directly To The Owner
Before considering a deeper partnership, apprentice or intern under the owner first. This is the best way to get to know the owner and learn more about the owner’s goals. In our town, a world-famous pizza maker trained a high school student employee at his pizzeria. At 29 years old, that former employee now owns the business with seller financing.
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7. Craigslist Or eBay
Believe it or not, people also advertise businesses for sale on Craigslist and eBay. While you need to make sure you’re not walking into a scam, there are legitimate businesses that you can buy at a modest price.
To avoid scams, never exchange any money or accept terms without doing due diligence. Start with an on-site inspection, then request access to review any deeds, titles or records proving ownership of unencumbered assets prior to purchase. Most states offer the ability to do a free Uniform Commercial Code check online, which will help you determine if any business or individual has any outstanding leases, liens or unpaid taxes.
Once you confirm that the business is legitimate, that’s when you can assess if it’s a worthwhile opportunity. The simple question to ask is: Is it making a profit? If yes, why do the owners want to sell it? If no, why is that the case?
Start Now
Buying successful baby boomer businesses is a great opportunity for millennial entrepreneurs. If you know where to look, there are businesses you can buy in with no money down and potentially generate a revenue immediately with little risk.
Founder and CEO of COMSTOR Outdoor, innovating and supporting success on Main Street and in the small business community.
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