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Taking over business from retiring baby boomers

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Bekit

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Get ready, millennials. It looks like a bunch of baby boomer businesses are about to be up for grabs.

I say this with deep regret. It didn't have to be this way. I would have much rather entered into a scenario where there was time, mentorship, and a relationship built with the retiring business owner.

Now, it looks as if we might be thrown into the deep end of the pool to recreate many of the businesses that close due to bankruptcy or death of the owners.

Is this generation ready to take up that mantle?

Seemingly not.

But the people here on the forum are at least poised with an excellent mindset and good grasp on fundamentals.

There has never been a more wide-open opportunity to provide value.
 

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mon_fi

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Simple yet effective, this idea is golden!
 

Walter Hay

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Glad I found this thread. I'm in the process of redoing my existing LLC to prepare myself for this... mainly on a smaller scale to start, then working my way up.


To the fast lane...
Don't forget that if you are buying an existing business that is not an online one, you can scale it rapidly by setting it up as a franchise system.

You will need to make it very profitable to attract franchisees, and you will need to keep a good record of the systems you use so that you can prepare the essential Operations Manual.

For more information, see
Starting a business with the intention of selling franchises.
and Rapid Scaling a business by franchising

Walter
 

MrTrash757

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Don't forget that if you are buying an existing business that is not an online one, you can scale it rapidly by setting it up as a franchise system.

You will need to make it very profitable to attract franchisees, and you will need to keep a good record of the systems you use so that you can prepare the essential Operations Manual.

For more information, see
Starting a business with the intention of selling franchises.
and Rapid Scaling a business by franchising

Walter
Oh yes 100% agree. Thanks for the links too, I’ll check em out!
 

Hadiatou BARRY

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In Singapore here there are a lot of profitable small business in the traditional industries. They are owned by baby boomers who cannot find successors. Their children are not interested in the business.

I believe that this applies in U.S. as well.

These business typical generates 10-20k monthly profit on average with moderate efforts in management. These are the business that are too small to be interesting to be sold to private equity/professional business investors but it is too big a money to be thrown away for retirement since it has a steady customer base and a reputation built over decades.

I was speaking it from some personal experience because I was being pitched to run a company selling boat engines. The owner has a common friend with my parents. They don’t even know me or my parents. I did not take it because I cant imagine myself selling boat engines.

I have another high school friend who took over his family business and quit his slow lane job. He felt obliged to take over because no sibling of his is interested. It is a raw material provider for construction and engineering companies. Gross margin is around 5 percent. Could make 200k-500k a year depending on the business environment. He is very optimistic on the business. “Within the next 2 years 30 business of my competitors are closing their shops because they have no successor. It is an old men’s business and I am the only 30 years old here”.

I am in a self-employed financial sales role. As of now I am working with a baby boomer who is passing his clients base to me. This is a common scenario for real estate agents/insurance agents/stoke brokers.

I see a huge opportunity for young people to network with such baby boomers to work out a collaboration plan. There are two strong reasons for doing so.

1) It makes your life a lot easier compared to yourself starting from scratch. A hell lot easier.

2) You do not to be excellent. You just need to be not lazy, stupid or unreliable. Most people here can do it

3) A lot of other young people are not interested. They rather do drop-shipping or MLM. That is crazy. This makes the successorship deal bargain in a market situation very favorable to young people looking to take over a business. The current market dynamic here is actually the old people who are actively hunting for young people to take over their business.
 

Hadiatou BARRY

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In Singapore here there are a lot of profitable small business in the traditional industries. They are owned by baby boomers who cannot find successors. Their children are not interested in the business.

I believe that this applies in U.S. as well.

These business typical generates 10-20k monthly profit on average with moderate efforts in management. These are the business that are too small to be interesting to be sold to private equity/professional business investors but it is too big a money to be thrown away for retirement since it has a steady customer base and a reputation built over decades.

I was speaking it from some personal experience because I was being pitched to run a company selling boat engines. The owner has a common friend with my parents. They don’t even know me or my parents. I did not take it because I cant imagine myself selling boat engines.

I have another high school friend who took over his family business and quit his slow lane job. He felt obliged to take over because no sibling of his is interested. It is a raw material provider for construction and engineering companies. Gross margin is around 5 percent. Could make 200k-500k a year depending on the business environment. He is very optimistic on the business. “Within the next 2 years 30 business of my competitors are closing their shops because they have no successor. It is an old men’s business and I am the only 30 years old here”.

Je suis dans un rôle de vendeur financier indépendant. Je travaille actuellement avec un baby-boomer qui me transmet sa clientèle. Il s'agit d'un scénario courant pour les agents immobiliers / agents d'assurance / courtiers Stoke.

Je vois une énorme opportunité pour les jeunes de réseauter avec ces baby-boomers pour élaborer un plan de collaboration. Il y a deux bonnes raisons à cela.

1) Cela vous facilite la vie par rapport à vous-même en partant de zéro. C'est beaucoup plus facile.

2) Vous ne devez pas être excellent. Vous devez juste être pas paresseux, stupide ou peu fiable. La plupart des gens ici peuvent le faire

3) Beaucoup d'autres jeunes ne sont pas intéressés. Ils préfèrent faire du drop-shipping ou du MLM. C'est fou. Cela fait de la succession une affaire de marché très favorable aux jeunes qui souhaitent reprendre une entreprise. La dynamique actuelle du marché est en fait les personnes âgées qui recherchent activement des jeunes pour reprendre leur entreprise.
[/CITATION]

Cette idée est super intéressante
En effet moi j'ai essayé le dropshipping, Amazon FB mais rien ne fonctionne vraiment
Je vais m'y intéresser de plus près.
Mais je vis en France, la loi sur la succession est très rude je ne pense pas pouvoir trouver quelque chose ici.
Je voulais juste savoir au USA par exemple quelles sont les conditions pour profiter décemment système ??
Merci
 

JunkBoxJoey_JBJ

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...partnered with a older contractor that just couldn't get it over the line. He was very knowledgeable and hands on, but lacked the people skills, digital skills and business skills. I provided the business side and he made sure we delivered on the project. I got half the new company, and he got his investment bought out by the new company from the profits of the new...
@Rwill ...would you be willing to share any feedback on the "how" you did this or how it was structured? i.e Did you use a business broker(s), an old school "handshake" or an attorney?

*FOR OTHERS SEEKING SOME HELP ON THIS TOPIC:

Seek this out...
BiggerPockets Business Podcast 51: Business Opportunity Is Knocking… Answer the Door! With Nigel Guisinger
 
Last edited:

Rossoneri

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@Rwill ...would you be willing to share any feedback on the "how" you did this or how it was structured? i.e Did you use a business broker(s), an old school "handshake" or an attorney?

*FOR OTHERS SEEKING SOME HELP ON THIS TOPIC:

Seek this out...
BiggerPockets Business Podcast 51: Business Opportunity Is Knocking… Answer the Door! With Nigel Guisinger
I'm also interested in this, being a young person excited about 'boring' businesses. Any help on how these are structured?
 

AdamSerk

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In Singapore here there are a lot of profitable small business in the traditional industries. They are owned by baby boomers who cannot find successors. Their children are not interested in the business.

I believe that this applies in U.S. as well.

These business typical generates 10-20k monthly profit on average with moderate efforts in management. These are the business that are too small to be interesting to be sold to private equity/professional business investors but it is too big a money to be thrown away for retirement since it has a steady customer base and a reputation built over decades.

I was speaking it from some personal experience because I was being pitched to run a company selling boat engines. The owner has a common friend with my parents. They don’t even know me or my parents. I did not take it because I cant imagine myself selling boat engines.

I have another high school friend who took over his family business and quit his slow lane job. He felt obliged to take over because no sibling of his is interested. It is a raw material provider for construction and engineering companies. Gross margin is around 5 percent. Could make 200k-500k a year depending on the business environment. He is very optimistic on the business. “Within the next 2 years 30 business of my competitors are closing their shops because they have no successor. It is an old men’s business and I am the only 30 years old here”.

I am in a self-employed financial sales role. As of now I am working with a baby boomer who is passing his clients base to me. This is a common scenario for real estate agents/insurance agents/stoke brokers.

I see a huge opportunity for young people to network with such baby boomers to work out a collaboration plan. There are two strong reasons for doing so.

1) It makes your life a lot easier compared to yourself starting from scratch. A hell lot easier.

2) You do not to be excellent. You just need to be not lazy, stupid or unreliable. Most people here can do it

3) A lot of other young people are not interested. They rather do drop-shipping or MLM. That is crazy. This makes the successorship deal bargain in a market situation very favorable to young people looking to take over a business. The current market dynamic here is actually the old people who are actively hunting for young people to take over their business.
My dream is to live in a warm place year round. I have been to Thailand and loved it there. Its warm year round, great food, beautiful sceneries etc. Saying that, most asian countries are similar to thailand so anywhere in oriental asia would do. @Walter Hay has recommended I read this thread and im happy he did. I had no idea about this and was wondering if anyone here on FLF has a connection to someone who needs to take over their business in asia. Or even help them run the business. I'm fed up with london, rainy country with barely any sun throughout the day.

When the sun is out i work out and generally feel great and active but when its raining and cloudy my mood changes. I feel low and depressed.
 

Rwill

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@Rwill ...would you be willing to share any feedback on the "how" you did this or how it was structured? i.e Did you use a business broker(s), an old school "handshake" or an attorney?

*FOR OTHERS SEEKING SOME HELP ON THIS TOPIC:

Seek this out...
BiggerPockets Business Podcast 51: Business Opportunity Is Knocking… Answer the Door! With Nigel Guisinger
Sorry I've been away for awhile, so I didn't catch this earlier. But I'll give you a run down on my story:

I did an apprenticeship in Carpentry with a local tradesman, worked for about 10 years with him as my mentor. A amazingly well rounded carpenter, but a terrible businessman. He hit a down cycle in the economy about 2008 while also suffering from poor money management. I was about to leave but he knew the business would collapse if he did, so I made him a offer.
I want nothing to do with the old business, but I'll start a new one in which the new business will buy the assets of his old business and we'll split it 50/50. But this will be done in payments from the profits of the new business in regular intervals so no cash up front. Didn't cost me a dime technically, but due to his situation I had to provide the capital to start the cash flow of the new business. This was a handshake deal at first and then ratified by lawyers.

I can't say why this wouldn't work for others in similar situations, even if its not a mentorship or apprenticeship. Just develop the relationship with the business owner, most of the time they don't want to shut it down.

Now in hindsight there is a lot I would change. Don't do partnerships unless you are positive you are moving in the same directions, and get the responsibilities of each of you in legally binding writing if you are going to have one. In my case, partnering with my old mentor has been difficult, as one a bad businessman, almost always they will stay a bad businessman.
Get the business lean, get efficient. Most of these old companies are bloated as they just run as is and the owner always adds things on they think they need. Half their problem is the overhead is not realistic to the business they are running. You'll need flexibility, you'll need cash flow, and you'll need reserves.

I've been going for about 6 years now. I am currently planting the seeds of having my main client purchase my business to augment their operations.

I hope this helps

Cheers
Riley
 

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Rwill

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If anyone is interested in this there is a ton of free resources out there. Jeremy Harbour and the Harbour Club specialize in this. There is also Nick Bradley of "Scale up your Business" who used to buy and flip businesses. Look into both of them then you'll have a jumping off point

Here is a great youtube video from Sweaty Start up interviewing Nick Bradley

View: https://www.youtube.com/watch?v=fqxXoduxf7Y
 

TheLearner

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You need to find a business where the owner is open minded to not only selling but also open minded to sharing all of the tricks and trade secrets. This can be scary for businesses so if you approach anyone, always offer a contract and a NDA. Luckily the business I bought is in an industry where security & due diligence is part of our service offerings so that was very standard. You should also have an attorney that is separate from the sellers attorney. You want to make sure things like non-competetes, NDAs, etc are in all the documents from the very beginning.

I worked with the prior owner as a 50/50 partner for about 1 year before the sale was actually in play. It was a 3 year process agreement that we worked out between the two of us. This way, I started taking more responsibility but he got most of the $$ for the first 2 years. It also gave me 3 years to learn about the business, services, clients, etc.
@becks22 Did you stipulate that the owner work with you for a year prior to purchase? I think buying a business is a great strategy, just curious how common it is to have the original owner working with you for a certain amount of time before you take it on 100%.
 

becks22

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@becks22 Did you stipulate that the owner work with you for a year prior to purchase? I think buying a business is a great strategy, just curious how common it is to have the original owner working with you for a certain amount of time before you take it on 100%.
A year is above average and shouldn't be considered the norm but I've seen on business listings usually something like 'seller will continue to work for xxx months if a rate is agreed upon both parties'. Some sellers think of their businesses as their babies. They want it to be sold to a person who will take care of their child so they don't mind staying on for 3 months + to ensure that.
 

WestCoast

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I'm late to the party on this, but, I want to add my experiences.

At age 22, I started a business in the outdoor recreation field.
This industry is *dominated* by boomers and people who started 'hobby' businesses 20-30 years ago... and just kept going.

When I started it, in 2005, there were something like 174 direct competitors of ours.
I always forget, but, there were a lot. Call it 50 that were serious and strong.

Fast forward to 2020, and, I don't know, maybe there are 5? 10?
So many of these guys packed up in 2008/2009 recession.

Our business (in a fairly stagnant total market - and certainly not a 'sexy growth market') has benefitted massively.

We had a killer website, sold online (online sales this year going over 90%), and just hustled.
Provided good service.
New energy.
Passion.

Yesterday, just yesterday, I concluded a deal to buy a ton of IP from our formerly biggest competitor, who closed up last year.

We went from $125k a year in revenue when I started, to $5M, with the potential we think to get to $12M in the next 3 years as more of this happens.

Declining market.
Unsexy product.

But, it's full of really nice people, who aren't great at running businesses.
And, they want out.
I'm no genius at all - so, if I can do well in markets like these - some of you smart guys can CRUSH IT.


Absolutely 100% can vouch for this being a real phenomenon.
Heck, you can probably buy your way to huge market share, for pennies on the dollar - in a lot of unsexy and boring markets.

I left at age 37, to full time travel the world, while our business grows and I acquire more businesses at good prices, on the side.


It's been amazing for our entire business, and, I think it will just accelerate over the next 1-7 years before the bulk of that generation are finally out of the picture in some way or another.
 

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