Baby-boomer business owners want to retire. An estimated 60-70% of existing business owners will leave their businesses by 2020. In rural communities, many of these businesses will not be able to successfully make the transition to a new owner. According to Thompson and Walstad of the Gallup Press, 1/3 of business owners hope to sell their business, 1/3 want t a family member to take over, and 1/3 plan to sell down their inventory, lay off staff and close their doors. This graying generation is producing 10,000 individual retirements each day.
“Crown Candy Kitchen was opened in 1913 by Harry Karandzieff and his best friend Pete Jugaloff. They brought their confectionary skills from Greece, along with a dream of providing a friendly family environment to enjoy their delicious creations. During the early 50’s Harry’s son George took the business over and built the business into what it is today. Now George’s three sons – Andy, Tommy and Mike run the business with a little help from the 4th generation.”
This information comes from Odee Ingersoll’s Community Leadership Briefing, Preparing Local and Regional Economies for The Coming Wave of Exiting Business Owners, which discusses the demographic, economic and market forces which are combining to create “the perfect storm for rural and older urban communities.”
According to Ingersoll, not every “business owner heading for retirement is a business closure waiting to happen.” But these baby boomers created these businesses and don’t have the experience of having taken over from somebody else. Not all of these businesses are strong enough to survive the transfer, but it is clear that it is better for a rural community if someone local can take over that business. “Local owners support their communities. Absentee owners take from those communities.”
So what is a rural community to do? Are these businesses worth the effort for community leaders to support these transitions? “Every community thrives or withers in part because of the wealth that has been created, retained and put to use there. Wealth creates employment for others, supports the new library project, the arts and school sports teams. It is spent inside the community in other stores, paid in sales and property taxes that improve a community’s infrastructure, and provides services adding to the perceived quality of life.
“Where does community wealth come from? Not employees. Not state workers. It comes from business owners – specifically local owners who live and work in their communities. When business ownership leaves a community, the wealth it creates leaves too.” (p.9)
I found this info on business transition at the Rural Futures Institute, hosted in May by the University of Nebraska. Over 450 attendees participated in this three-day conference to discuss the creation of an institution to “assist rural Nebraska and the Great Plains in creating a resilient and sustainable future building upon a culture or innovation and entrepreneurship.”
Odee Ingersoll works with the Nebraska Small Business Development Center and the Apogee Center, which offers financial advisors nationwide.
