![\"Time-to-sell\"](\"https:\/\/GOLDENCIRCLEADVISORS.COM\/wp-content\/uploads\/2015\/11\/Time-to-sell-300x225.jpg\")
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What is so special about \u201cBaby Boomer\u201d business owners?\u00a0 Well, there are a lot of them.\u00a0 It is estimated 52 percent of businesses are owned by people between 50 and 88 years of age. This equates to 9 million businesses in the United States. Put it another way, a business owner is turning 65 every 57 seconds.<\/p>\n
So, why is this important?\u00a0 Typical of most business owners, the value of their business amounts to 50 to 75 percent of their net worth (if not more); the remainder in personal real estate and financial investments. Ordinarily, the business owner has only one chance to monetize his or her largest asset through the sale of the business.<\/p>\n
It is estimated that 11,000 people are turning 65 years old every day, with this trend continuing for the next 18 years. Being that many of these Baby Boomers are also business owners, one would suspect that every year for the next two decades more and more business owners will be wanting to sell their businesses to cash out and fund their retirements. These businesses amount to some $10 trillion worth of assets.<\/p>\n
Yet while more and more businesses go up for sale, the audience of buyers is decreasing. Today, the highest segment of business buyers is the same Baby Boomers in the age range of 55 to 64 years old. The 80 million millennials in the U.S. make up a larger demographic, though their abilities to purchase these businesses are quite low.<\/p>\n
Applying the law of supply and demand, there is going to be a growing inventory of businesses for sale each year, while the number of qualified buyers is decreasing each of those years. The law of supply and demand would suggest there will be pricing pressure on these businesses. In addition, overall only 1 out of 4 businesses actually sell after being put on the market; however, the success rate increases to 1 in 3 for businesses with sales of $10 million, and the sale success rate grows to 1 in 2 for businesses with sales greater than $10 million.<\/p>\n
Now What?<\/strong><\/p>\n The PriceWaterhouseCoopers accounting firm estimates more than 75 percent of business owners have done little planning for their single biggest financial asset. It is sad to say, but business owners spend more time planning their next vacation than planning for their exit into retirement.<\/p>\n Business owners should start the exit planning process today. Serious consideration should be given to creating a timeframe to place the business in the best position to be sold at the highest possible valuation.<\/p>\n Fortunately, the window of opportunity is quite good. Current conditions of rock bottom interest rates, low inflation, historically low capital gain taxes and overall high business valuations make this an ideal time to sell a business. In real estate it is all about \u201clocation, location, location,\u201d whereas in business it is all about \u201ctiming, timing, timing.\u201d\u00a0 Now is the time to cash in.<\/p>\n Exit planning, however, is a process that requires a significant amount of work. Most important, business owners need to assemble a team of professional advisors to assist them in this process.\u00a0 The team may consist of all or some of these professionals: a business intermediary firm, CPA\/accountant, business attorney, financial planner, investment advisor, insurance advisor, valuation specialist, investment banker, banker and business consultant.<\/p>\n Using the analogy of an actual roadmap, this process can be broken down into five exits:<\/p>\n Exit 1:\u00a0 Making the Decision to Sell The actual Planning Process often includes the following seven steps:<\/p>\n 1. \u00a0Identify Exit Objectives There is no time better than right now to start planning an exit, whether that is tomorrow, next month, next year or the next decade. Just be careful not to miss your EXIT\u2026else you will hear your GPS (or significant other) say, \u201cwhen possible turnaround\u201d or as my GPS would say, \u201cyou idiot, you missed your exit\u2026proceed on this road for another 20 miles.\u201d<\/p>\n <\/p>\n This article appeared in the November 2015 edition of Traverse City Business News.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" What is so special about \u201cBaby Boomer\u201d business owners?\u00a0 Well, there are a lot of them.\u00a0 It is estimated 52 percent of businesses are owned by people between 50 and 88 years of age. This equates to 9 million businesses in the United States. Put it another way, a business owner is turning 65 every […]<\/p>\n","protected":false},"author":2,"featured_media":560640,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13,3,2],"tags":[],"class_list":["post-560638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-seller-articles","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=560638"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560638\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media\/560640"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=560638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=560638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=560638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nExit 2:\u00a0 Exit Planning Process
\nExit 3:\u00a0 Maximizing Business Value
\nExit 4:\u00a0 Preparing the Business for Sale
\nExit 5:\u00a0 The Deal Process<\/p>\n
\n2. \u00a0Quantify Business & Personal Financial Resources
\n3. \u00a0Maximize & Protect Business Value
\n4. \u00a0Ownership Transfer to Third Parties
\n5. \u00a0Ownership Transfer to Insiders
\n6. \u00a0Business Continuity
\n7. \u00a0Personal Wealth & Estate Planning<\/p>\n