You’ve heard this before… get ready as the Baby Boomers retire!

Many Businesses for Sale as Baby Boomers Retire

You may have become desensitized to this fact but I REALLY want you to pay attention… An overabundance of businesses will come to market in the next 10 years as baby boomers retire. SME Research, LLC estimates between 1.36 and 2 million

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firms will be ready to transition.

Why is this important and why should you care?

As of 2012, the Baby Boomer generation, 75 million strong, is beginning to retire. All business owners will be impacted by basic Economics 101: the large supply of businesses for sale will result in downward pressure on pricing. Some industries will consolidate as existing businesses choose to grow by acquisition at favorable prices.

If you are a baby boomer over 57 years old, you need to:

1) recognize that this trend is here now;

2) prepare yourself, your family, and your business for the inevitable transfer of your largest single asset;

3) understand the value of your business today and determine if, once transferred, it will be enough to support your dreams.

This is real. You have invested years in building your business to support your retirement. You have many hopes and dreams for your Life Beyond Business,™ all of which depend on the successful transfer of your business. Don’t put off preparation only to have regrets three to five years from now.

Visualize what the transfer of your business should look like:
When might be the best time?
Who is the best target to take charge of the business given your desires and financial needs?
How much after-tax income do you need to live the life you want?

Finally, recognize that you CAN influence the value of your business

Secure a market valuation and determine if that will be sufficient to support your after-tax income needs once transferred and combined with your other personal assets. If that value falls short, work diligently on increasing the value of the business.

Seek expert help. The fact is, you are not a wizard at the financial, legal, and logistical skills necessary to successfully transfer your business. Create a small group of advisors including your accountant, lawyer, financial advisor, and a reputable business broker/consultant who understands the market through the eyes of a buyer. You only have one shot at this, so rely on professionals to guide you and don’t fall into the trap of getting “expert” advice on the cheap. Expert advice costs money…money that should easily be recovered with proper planning, legitimate tax minimization, and increased money in your pocket due to the skill of your business broker.

Time is still your ally today, but the longer you wait, the more planning opportunities are missed.

You are fooling yourself if you think you’ll put this on your to-do list and get to it soon. You are busy running your business and before you know it, three years will have passed. The cost will likely be measured in a lower selling/transfer price, higher taxes paid on the transfer, and disappointment. Start the conversation TODAY to create a realistic, profitable plan.

And…if you hope the market will improve for your business in the future, the SME Research, LLC study looked at an even larger group – owners who are 47 today – and determined 2.5 to 3.8 million firms should hit the market in the next 20 years.

Start planning today and get a jump on the youngsters!

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