Are you prepared for the “silver tsunami”?
The term is a metaphor for the surge of baby boomer-owned businesses that are expected to change hands as their owners retire within the next decade.
Calling it a tsunami is no joke. According to Project Equity, a nonprofit consultancy dedicated to increasing worker ownership in the U.S., baby boomers own 2.34 million businesses in our country, employing nearly 25 million people.
For many reasons, the employee-owned business model makes sense. It delivers real benefits to the businesses and the communities they serve. The employee-owners are, quite literally, invested in the company’s success — and a more engaged staff means higher productivity levels, greater job satisfaction and more job stability.
For outgoing owners, selling the company to their staff can be an attractive option. When the kids aren’t interested in the family business, many owners are faced with a choice of either trying to sell their company in a buyer’s market with low-to-no prospects, or closing shop entirely and losing the equity built through years of blood, sweat and tears. The option to transition to an employee-owned business can be both financially beneficial, since these transactions require a deeper level of transparency, and emotionally rewarding.
It’s an underrepresented business model but it’s growing, and policymakers have begun to pay attention, introducing new legislation to help support its growth. In the past three years, cities such as Austin, Oakland and Berkeley have passed ordinances to support the growth of worker cooperatives. In New York City, the city council has invested $1.2 million in services to support businesses transitioning to an employee-owned model.
At the federal level, two bills were introduced last year to provide workers financial assistance to purchase businesses. If passed, the U.S. Employee Ownership Bank Act would create a bank that would provide $500 million in low-interest loans to help employees purchase their companies. The Worker-Ownership, Readiness, and Knowledge Act would offer states $45 million in grants to help establish or expand employee-ownership centers.
If you’re a boomer business owner in the pool industry, have you started succession planning? If not, I hope you’ve found our series on the topic by expert Scot Hunsaker informative and helpful. If the thought of selling your company to your staff appeals to you, you’ll want to pay close attention to the last installment of this series. It focuses on the tough questions that need to be answered when considering a transition to this unique but rewarding business model.