The men’s hairdresser down the road from me has hung up his scissors after twenty-four years.
The sign on his shop window apologizes and the shop itself is up for lease. Shortly there won’t be any evidence a long standing local business was once there.
Roy had no exit from his business and he sell the operation as a going concern.
For Roy his retirement will be funded solely out of his savings. If he’s lucky he’ll have saved enough of his income from the business for a comfortable retirement – unfortunately many small business owners they’ll eke out the rest of their lives on the pension.
Even for those who have planned for an exit, many of their plans have fallen over in the aftermath of the 2008 financial crisis.
It’s always been questionable whether Gen X and Y entrepreneurs could afford to pay the sums for the affluent retirement of Baby Boomer business owners but now the post 2008 contraction in lending means it’s even less likely retiring business owners like Roy will find someone to buy their businesses.
While the focus is on twenty something app developers selling their businesses for a billion dollars, the truth is that wealth for most business owners lies in the local newsagent, hairdresser or coffee shop owner being able to sell their operation for a reasonable return.
For many baby boomer business owners it’s going to mean working more years than they intended and sharply reduced retirement expectations.
Property values too are difficult. Many boomer businesses had the sensible model of buying the property their business occupies as a retirement nest egg.
Again those properties are too expensive for the new generation and the deleveraging economy means the outlook for property values isn’t good.
On every level, things are going to be tough for those wanting to sell businesses over the next decade.
Those who do get good prices for their businesses are going to be those doing something exceptional to gain attention with income and profits that make them stand out from the cloud.
Just being the best hairdresser in the neighbourhood or having a popular cafe isn’t going to be enough.
Hopefully Roy The Barber managed to stash away enough for a well deserved comfortable retirement.
Gloomy, but no reason to doubt what you say. Anything less than a sparkling profitable business and a solid, affordable lease makes a business hard to sell. Planning for a sale is just as important as developing a hot concept.
Jack Delosa’s has some very interesting thing to say about the impending exit of many baby boomers from the business environment.