Small business owners tend to be locally minded. In a report published by the Business Journals on small to medium-sized business:
• 91 percent generate local sales
• 70 percent prioritize doing business with local companies
• 64 percent are actively involved in their local community to promote good will and generate business
• 63 percent consider the business they do directly with the local community key to their company’s success
• 58 percent rely heavily on local business
You can download the full report here.
Disproportionately Positive Impact
Owners of small businesses won’t be surprised by these numbers. Ties to the local community are well-established among entrepreneurs and a top concern when the time comes to sell. When we speak with owners who are ready to retire, the overwhelming majority want to find a buyer who will continue the business’ legacy not only within the business (caring for employees) but within the community. Many of these owners have longstanding commitments throughout their cities and towns and it's important the new owner continue to honor them.
[su_pullquote align="right" class="pullquote"]A high number of business owners—57 percent—don’t plan to retire until after age 66.[/su_pullquote]
This local focus is intrinsic to small business. The very existence of independent organizations pumps more into the local economy than larger chains are capable of. Economist and author Michael H. Shuman told American Express, “Every single dollar spent at a local business leads to two to four times the amount of jobs, income and wealth, tax collections and charitable contributions.” He goes on to say local companies have more local relationships, with a disproportionately positive effect. The 30/50 Project reported that “for every $100 spent in locally owned independent stores, $68 return to the community through taxes, payroll and other expenditures.” When patrons choose instead to spend that $100 at a national chain, only $48 stays local, and when they buy online that number drops to $0. Small to medium sized businesses understand the role they play in their communities and the importance of supporting other local businesses.
More Owners Are Sticking Around Longer
These strong ties to the community may be one reason many owners are sticking around longer. The Journals’ report showed a high number of business owners—57 percent—don’t plan on entering retirement until after age 66. Of these, 19 percent plan to stick around past age 70 and 13 percent never intend to retire. The top reasons these business owners gave for their desire to continue working were to stay active and involved (69 percent) and simply because they enjoy the work (64 percent).
[su_pullquote align="right" class="pullquote"]Baby-boomer owners are willing to wait for the right next owner, because they want more than a check. They want succession.[/su_pullquote]
Continuing in the business isn’t necessarily the same as continuing to own the business, though. Plenty of owners are happy to hand off the reigns so they can be involved, but less so. This can be a strong advantage for the buyer, who has an opportunity to learn from the previous owner over time, smoothing out the transition and shortening their own learning period.
All this points to a market full of owners who are willing to wait for the right next owner. As Benjamin Gerut of Kuzari Group, LLC. put it to Axial, retiring boomer business owners want more than a check, they want succession. “Buyers must care about the employees. After working with many of these people for years or decades, it is hard for me to imagine an owner being comfortable simply selling to a [private equity group] without any comfort as to the long-term future of the company and its human resources.”
The desire to keep community commitments are enough to keep baby boomers working until they find a buyer who is as committed to the local community as they have been.
Speak with an expert about transitioning your business.