\n<\/p>\n
W<\/span>ant to buy my business? It\u2019s been very profitable. I\u2019ve run it for more than 25 years. But no, you don\u2019t want to buy it. Like most small businesses in this country, there\u2019s really nothing of value here.<\/p>\n According to the Small Business Administration, there are approximately 33m small businesses in the US. But fewer than 7m actually employ people. The rest comprise freelancers, side gigs and independent contractors. I\u2019m sure many of these people are making a living. But are they building assets? A brand? Probably not. If that \u201cbusiness owner\u201d suddenly disappears, their business disappears with them. No one wants to buy a business like that. There\u2019s no value.<\/p>\n My company is no different. Like so many other business owners, I\u2019m a micromanager and a control freak. My company has a few employees but in reality I\u2019m nothing more than a glorified independent contractor. The business is built around me. If I get hit by a bus, my company crumbles into nothing. No one wants that.<\/p>\n We live in a service-based economy, which according to federal data accounts for as much as 77% of US GDP. My business is part of that. I bill for hours incurred. I manage a handful of open projects at any given time. I\u2019m constantly scrambling for more work. There\u2019s no commitment. There\u2019s no requirement to use us. Unlike big tech companies, my clients are not bound to any contract. And even if they were, there would be little benefit to me \u2013 enforcing contracts is too expensive and time-consuming for a company my size. A buyer of my company would not be buying any customers \u2013 they\u2019re free to go wherever they want. There\u2019s no value in that.<\/p>\n Being a service business, I have no hard assets to sell. My inventory is hours. There are no products on shelves. No machinery or equipment. No buildings or properties or furniture or fixtures. And, thanks to the pandemic, there\u2019s no office. All of my employees are remote. Our \u201ccorporate headquarters\u201d is literally a post office box. Our phone system is virtual. Our software and data is in the cloud somewhere. It all makes for a lean, efficient organization. But it\u2019s a house of cards.<\/p>\n A just-published report by McKinsey says that there will be a \u201cgreat ownership transfer\u201d over the next 10 years when baby boomers who run as many as 6m small and midsize American businesses retire. UBS\u2019s 2026 Global Entrepreneur Report has found that nearly a third of global entrepreneurs are actively considering exiting their businesses within the next five years. For those aged 65 and over, this figure surges to 57%.<\/p>\n double quotation markA younger generation could breathe more life into a business<\/p>\n Sounds great. But if you\u2019re one of those business owners \u2013 and you run a service business like mine \u2013 I wouldn\u2019t get your hopes up for a big payday. McKinsey warns that \u201cwithout intentional action, many viable small businesses may close rather than transfer ownership\u201d. It\u2019s probably true. Can this be remedied? The clock is ticking. And there are only a few options.<\/p>\n A business owner could hand down the business to their kids. But this only works for people with kids who are actually interested in doing the work. For some, this is a viable succession strategy. A younger generation could breathe more life into the business.<\/p>\n This worked for me. My dad and I were the only two involved in my business until he unexpectedly passed away back in 2005, which left me no choice but to take things over and grow it. I added employees and products and, with good fortune, was able to grow profits significantly beyond what the two of us were making. Many owners could do the same and provide an ongoing income stream for mom and dad. Or the kids could run it into the ground.<\/p>\n Instead, some older business owners may want to build an actual business with value. This would involve changing their billing models. Enforcing contracts. Buying property. Creating processes. Building infrastructure. Hiring a great management team. Creating a sustainable brand.<\/p>\n Sounds great, but there\u2019s a problem with this approach: it\u2019s exhausting. Ask any person over the age of 60 to do this and they\u2019ll be like: Who has the energy? That\u2019s a younger person\u2019s game! And they\u2019re not wrong. After spending 40-plus years in the business world, I understand why most people my age just want to play golf, relax and spend time with their grandkids.<\/p>\n There is one other good option for a service business owner: build cash. I\u2019ve been pulling profits out of my company all of this time and doing my best to save. I\u2019ve bought life insurance. I\u2019ve put everything in a trust to protect against liabilities and potential estate taxes. I know that my business won\u2019t be providing me with retirement income. But my savings will.<\/p>\n All of this presents a great opportunity for younger entrepreneurs. Why start a business from scratch when all of these business owners are looking to sell? Why not instead partner or purchase from an older business owner, keep them on as a mentor, take over their operations, assume their customers, leverage what employees, contractors and relationships they have, and then make your improvements? Instead of nothing, you\u2019ve at least got a head start.<\/p>\n","protected":false},"excerpt":{"rendered":" Want to buy my business? It\u2019s been very profitable. I\u2019ve run it for more than 25 years. But no, you don\u2019t want to buy it. Like most small businesses in this country, there\u2019s really nothing of value here. According to the Small Business Administration, there are approximately 33m small businesses in the US. But fewer<\/p>\n","protected":false},"author":1,"featured_media":47604,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[20292,303,477,6758,1406,1407,693,819,6585,98],"class_list":{"0":"post-47603","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-boomer","9":"tag-business","10":"tag-companies","11":"tag-disappear","12":"tag-gene","13":"tag-marks","14":"tag-millions","15":"tag-owners","16":"tag-retire","17":"tag-small"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/47603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47603"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/47603\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/47604"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}