The Entrepreneurial Generation

The Entrepreneurial Generation

BEATING THE BOOMER BUST PART I THE ENTREPRENEURIAL GENERATION Why do Baby Boomers Own So Many Small Businesses? Analyzing the Boomer Bust I dont predict the future, I just look at what has already happened and determine the inevitable consequences. Peter Drucker The Baby Boom started 60 years ago. Its effects are still reverberating Boomers Own Businesses o o

o o USA population: 318 million Baby Boomers: 78 million (25%) 2-500 employee businesses: 9 million Boomer owned: 5.5 million (61%) Why are Boomers 2 times more likely to own a business? Start With the Numbers Births in Millions 5 4.5 4 3.5 3

2.5 2 1.5 1 0.5 0 1965: 1965: 40% 40% of of Americans Americans are are under under 21 21

1945: 1945: GIs GIs returning returning from from WWII WWII start start the the Boom Boom 5 5 0 5 0 0 65 70 75 80 85 90 95 00 05 5

3 4 4 5 6 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 Add New Technology o o Television becomes the center of the home Marketers messaging reaches millions Walt Disneys Genius o o o

Bypass parents and market directly to Boomers 1955: Disneyland opens/Mickey Mouse Club 1959: 25,000 pair of Mouseketeer ears sold daily With No Internet No 800 numbers No credit cards Everyone Shares the Same Experiences Regional and ethnic differences blur. Boomer moments are Americas moments. Watch the Economy Grow Suburbia booms

A car in every garage A rising tide lifts all boats New schools, highways, stores, houses More consumers, more jobs, more wealth Boomers Go to School o US workforce goes from 6% to 25% college educated o 1970s employment grows 53% faster o Colleges and corporations are overwhelmed College Graduations 1200000 1000000 800000 600000

1965: 1965: Boomers Boomers start start turning turning 21 21 400000 200000 0 1960 1965 1970 1975

1980 1985 1990 Boomer Drivers o Scarcity o Not enough classrooms o Not enough colleges o Not enough jobs o Formula for Success o Work harder o Prioritize career

Everything is a competition! Boomers Needed Businesses o They were raised to expect it all o Educated o Consumeristic o Success is defined by: o Career o Lifestyle o Possessions Boomers are what they do, and are what they own!

Boomers go into Business 800000 700000 600000 1975: 1975: First First Boomers Boomers turn turn 30 30 Business Start-Ups 500000 400000 300000

200000 100000 0 70 71 2 19 19 197 973 974 75 7 76 1 1 19 19 197 978 979 80 2 81 1 1 19 19 198 983 984 85 7 86 1 1

19 19 198 988 989 90 91 1 1 19 19 By By 1986 1986 business business formations formations are are 250% 250% of of 10 10 years years earlier earlier

Franchising o Business Format franchising The promise: If you are willing to work very hard, you can have an executive income without climbing the corporate ladder. Chasing Success o Women join the workforce o From 1950 to 2000, a 300% increase o Less time at home o 1984: Work/Life Balance is coined Boomers Fuel Franchising New Franchises in America 25000

Boomers Boomers Turn Turn 30 30 20000 15000 10000 5000 0 1950 1960

1970 1975 1976 1977 1978 1979 1980 In five years, new franchise unit sales grow from 3,000 to over 20,000 annually

Outsourcing The Home o Find other self-employed Boomers to: o Babysit (day care) o Do homework (after school care) o Coach (organized sports) o Cook (take out, drive through) o Home care (lawns, repairs, cleaning) Boomer Serving Boomers o Boomers free time for producing income by contracting to other hardworking Boomers, who o Free time by shifting their

chores to other hardworking Boomers, who o Hire other Boomers. What Happens Next? US Labor Force Growth 3 2.5 2 19851985- Last Last Boomers Boomers turn turn 20

20 1.5 1 20102010- First First Boomers Boomers turn turn 65 65 0.5 0 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40 45 50 55 60 65 70 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

A 50 year surge is coming to an end Exiting A Small Business Millions of Boomers are retiring o Most are planning on equity from their business o What if it isnt there? o (In the fourth quarter of 2012 )For the first time, baby boomer retirement was the number one reason driving business sales. Pepperdine University/IBBA/M&A Source : Market Pulse Survey 2013 The Exodus o 5 million Boomers are exiting

o Buyers have more choices that do not require: o Long hours o Investment o Risk Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are just symptoms. What America really faces is a demographic cliff. The Wall Street Journal, February 2, 2013 PART II THE TSUNAMI As the Boomers Exit, Where Is the Next Generation of Small Business Owners? The Baby Bust

Births in Millions 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 1965: 1965: Boomers Boomers turn turn 20, 20, but but

delay delay having having families families 44 47 50 53 56 59 62 65 35 38 41 19 19 19 19 19 19 19 19 19

19 19 1990: 1990: Birth Birth rates rates again again reach 4 million million 68 71 74 77 80 83 86 89 92 95 98 01 04 07 19 19 19 19 19 19 19 19 19 19 19 20 20 20 What Americans have to understand is that this country reached its demographic peak ten years ago. David T. Beers, Standard & Poors Head of Sovereign Credit ratings on the downgrading of the U.S. credit rating to AA+, August 7, 2011

The Sellers Tsunami o Demographic: o Fewer people o Slower growth o Oversupply o Psychographic: Generation X is less inclined to entrepreneurship o Sociographic: Big business can outbid small business for workers Demographic Births in Millions

5.00 4.50 4.00 Boomers turn 65 Xers Turn 45 3.50 3.00 2.50 20 1 3 0 14 015 0 16 017 0 18 019 0 20 021 0 22 023 0 24 025 0 26 027 0 28 029 0 30 031 0 32 2 2 2 2

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 From 2018 to 2023 Retiring Boomers will outnumber GenXers reaching ownership age by 4,000 A DAY! Psychographic

o My life outside of work defines me o Business is secondary o Dont mix job and family o Too much work is bad o Time for my real life o Money isnt that important (and Ill probably inherit a bunch from my boomer parents anyway) Sociographic o Corporate America is replacing the Boomers

o Jobs are being tailored for scarce workers o Entrepreneurs cant match: o Limited hours o Benefits o Telecommuting o Flex time o Personal leave Different Expectations o Boomer Entrepreneurs o Work is success o What I do is who I am o Delayed gratification

o GenX Workers o Average 7 career shifts o I am not my job o The future is uncertain Everyone is Selling o 85% of Business Owners said that they planned to sell in the next 5 years (Price Waterhouse- 2008) o o o o 85% of owners 60 or older 85% of owners 65 or older

85% of owners 70 or older All planned to sell in the next 5 years Beating the Boomer Bust The Sellers World Flood of businesses coming to market Most are not suited to GenX buyers The Buyers World More alternatives Little or no savings Low tolerance for risk

Cold, Hard Facts o 5,500,000 Boomer Businesses o Brokers sell 1 out of 5 listings o The other 80% will o Create their own exit plan, or o Close Building Your Exit Plan o Internal o Employee(s) o Family o External o Third party sale o Tailored to a GenX buyer

o The sooner you start, the better Its ONLY the most important financial event of a lifetime! Triangulation You Cant Change History o Historical birthrates are fixed in stone o Every owner will exit his or her business Boomer owners need exits from 750 small businesses a

day Planning Coaching Assessment Development Implementation For Business Owners in Transition www.exitmap.com

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