Baby Boomers account for 40% of small business and franchise ownership in the US. This equates to approximately 2.3 million small businesses, 35% of which have been in operation for over ten years. Naturally, Americans rely on Boomer-owned businesses to succeed. In fact, they employ 25 million people and 1 in 3 Americans rely on income from a Boomer-owned business. Tens of millions more are dependent on their existence and success, such as vendors, suppliers, freelancers, and gig workers.
Despite these astronomical successes, 10,000 baby boomers retire each day. This leaves many asking the question: What happens when Boomer business owners retire? Studies show that millennials are less likely to take over the family business, and nearly 60% of those businesses have no succession plan. In addition, many Boomers have no retirement savings and will need to sell their business in order to do so comfortably. However, selling a small business is not as easy as it sounds in today’s climate. Boomers want to sell to those who will take good care of the business that they have dedicated a large portion of their life and wealth to. Therefore, many will require specific skills and experience, or will keep existing employees for as long as possible.
Despite the technicalities, experts say that by 2045, Baby Boomers will sell or pass on $72.6 trillion in wealth to their successors. This phenomenon has been dubbed “The Great Wealth Transfer.” The children of these Boomers are expected to inherit an estimated $68 trillion, while charities will receive 14% of the total wealth transfer. With such an inheritance at their expense, young consumers are expected to turn to big ticket items, invest in real estate, and become big name clientele for banks. The greatest wealth transfer in history is upon us, meaning big bucks and big changes for the future of business ownership in the United States.