It can be confusing to keep straight the comings and goings of the Baby Boom generation and their ownership of small businesses. The yin-yang narratives are (1) More and more people between the ages of 55 and 64 are starting small businesses and (2) Small business owners who are in their 50s and 60s are selling businesses at a robust clip.
Here are examples of the two clashing “trend stories”:
People in their 50s and 60s are starting businesses
In a recent story on NPR’s All Things Considered, reporter Ina Jaffe reported that Kauffman Foundation research shows that business creation by older Americans grew more than 60 percent between 1996 and 2012 and that in 2012, nearly a quarter of all new businesses were started by people between the ages of 55 and 64.
AARP is trying to appeal to those in their 50s and 60s by running national advertising to support the concept and brand, “Encore Entrepreneur.” According to AARP’s Deborah Banda, “An encore entrepreneur is someone over the age of 50 who starts a small business as a new career. Many encores start a business that meets a social need such as a non-profit that provides skills training for the unemployed. Others turn a hobby or passion into an income stream. Some encores start their businesses on the side while winding down their first careers. Others do so after ‘retiring’ from their wage or salary positions.”
People in their 50s and 60s are selling businesses
An on-going survey conducted by the online business-for-sale marketplace BizBuySell.com reveals the flip side of the “starting a small business” narrative. Last year, the survey began to note a spike in business sales that has continued to expand in the first few months of 2014. “The reason brokers are feeling confident about the growth of listed businesses in 2014 is the increasing number of Baby Boomers who are reaching retirement age and interested in selling their businesses,” according to the company. In fact, 50 percent of surveyed brokers estimated that more than half of the 2013 small business transactions were attributable to retiring Baby Boomers. Another 29 percent of respondents estimated 25 to 49 percent of 2013 sales included Boomer owners. While that is already a high number, brokers expect it to climb even higher in 2014. Seventy-six percent of respondents believed the number of Baby Boomers who will sell their business in 2014 will outpace the number of owners who sold their companies in 2013. And, at least during the first quarter, the brokers were correct.
Both trends are true
The sheer size of the Baby Boom generation has always vexed those who want to reduce them down to stereotypes. Population factors can explain why there can be simultaneous record growth in encore entrepreneurs and former entrepreneurs. Many individuals in their 50s, 60s and older have all the traits, resources and vitality one needs to create or run a successful small business. And many individuals who have owned or run small businesses are ready to sell them and start on the next chapter of their lives.
As for us, we’re going to keep exploring both trends.