Taking over business from retiring baby boomers

[Rainy_TX]

I had a friend that did something similar. She started working for a weld inspection and testing company. A few years later, the owner wanted to retire and his kids had no interest in the business. He owner financed the business for her and now, she's been employing marketing and online business strategies to build the business way beyond what it was before she took over!

 

[Rwill]

What if the business was running the businesses? Find some hungry MBA's who aren't afraid to get sweaty and you contract it out so that the original owners make their money as a drawdown , x amount a year for 5 or 10 years and then its yours.

The folks you get to run them make peanuts + incentive bonuses.

Your job would be knowing whats a great deal and what smells fishy , finding them and closing the thing.

Sweaty startup just did a video on this

I reshared this link, as its gold. It's brought me tremendous value.
It's sent me down a rabbit hole and I'm actually looking at spreading with some accountants in the area that are assisting companies with winding down. I've seen a few shut down lately and sell assets off for pennies on the dollar

 

[Rwill]

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

 

[Zooman009]

There's also a business opportunity here -

Offer a "succession planning" service where you connect retiring boomers with entrepreneurs who are willing to work, in exchange for a finder's fee.

This is a fabulous idea for how to get into a "real" business rather than just trying whatever fad is current at the moment.

And I bet a lot of them are unsexy businesses that most people can't imagine doing (like the one selling boat engines).

While everyone else is out looking to "follow their passion," a few people who are willing to say, "It's about providing value, not following my passion," and they're the ones who will make a killing.

I'm going to keep my eyes open for something like this.

I saw this post and instantly wished that a service like that existed.
As I was going through this thread, I kept wondering "but how do I find these people who would sell their business"

Interesting to see that need peeking into my mind where I the pushed it aside and kept mindlessly scrolling...

 

[Bekit]

I saw this post and instantly wished that a service like that existed.
As I was going through this thread, I kept wondering "but how do I find these people who would sell their business"

Interesting to see that need peeking into my mind where I the pushed it aside and kept mindlessly scrolling...

I mean... it would just be a matter of building good old-fashioned relationships and trust, wouldn't it?

The business owners wouldn't be that hard to find.

Ideas...
- Drive into any small-town downtown area and look for businesses that don't look like chain stores. Walk in and just ask to talk to the owner. Ask them if they have a succession plan. If they do have a plan (e.g. their kids are going to take over) and they're not interested, ask them if they know anyone who is getting close to retirement age and would be open to working with a younger person who could learn the biz and take it over.

- See if you can pay the local chamber of commerce to send out a flier on your behalf. Write up a nice flier explaining what you're looking to do and how you plan to deliver value to them.

- Narrow down your niche (e.g. Hardware stores, or HVAC companies, or whatever business you think will be a viable niche in the next decade) and just focus on talking to those business owners. Get good at connecting them with young, trustworthy, hungry talent. Once you've got one or two success stories under your belt, you'll know what it takes to scale it up from there.

 

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[Kevin88660]

Yes! They don't want to close down because it's their legacy but they can't physically keep up with the work if they are aging not so gracefully. The business I have now, I bought from a boomer and I know other boomers in similar spots.

Hi Becks could you elaborate more since you have personally done the deal before?

What is the buyer seller dynamics in the market?

What are the potential pitfalls?

What is a reasonable valuation for buying the business? Reasonable agreement for profit sharing? Relevant legal and financing paper works?

What is the coaching and apprenticeship package provided? A lot of the business relies on personal branding and relationship of the owner. A lot of the running of the business has to be taught by the owner.

Thanks!

 

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[AmazingLarry]

We bought a bunch of vending routes from an older owner that was having health issues. He spent a lot of time helping us, showing my boys how to do things, and really just wanted to make sure that his customers were taken care of once he was out of the picture.

This is a HUGE untapped resource. Find a market with a lot of boomers. Buy or start one business. Slowly buy up / out the rest.

Engineering / consulting businesses are ripe. Older owners want to make sure their customers are covered. Many are more than happy to just pass them along in many cases. Just show you do good work.

Interesting to hear you mention engineering consulting businesses. Is your work related to this area? Just curious how you are involved (I recently started a small engineering freelance side hustle that I'm looking to grow and I'm always looking for new ways to try reaching potential clients)

 

[Doctor.IM]

We bought a bunch of vending routes from an older owner that was having health issues. He spent a lot of time helping us, showing my boys how to do things, and really just wanted to make sure that his customers were taken care of once he was out of the picture.

This is a HUGE untapped resource. Find a market with a lot of boomers. Buy or start one business. Slowly buy up / out the rest.

Engineering / consulting businesses are ripe. Older owners want to make sure their customers are covered. Many are more than happy to just pass them along in many cases. Just show you do good work.

How did you finance the deal ?
Did you put any money down ?
Is it envisageable, from your experience, to make fully seller financed deal in a buyer market such as engineering businesses ?

Thank you so much!

 

[JunkBoxJoey_JBJ]

...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

 

[Rossoneri]

@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]

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.

 

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[becks22]

@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.

 

[BLIM]

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.

Hi Kevin,

It's good to find someone in the same country.If have chance would like to meet up sometimes

 

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[TryGeek]

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.

I think you can't imagine selling boat engines the way they do. But imagine selling them online like you never touch a boat engine or maybe even see a boat engine. I think you could actually imagine doing that. So you just have to find the the points of this business that require people and use technology smooth out all those pain points. You might actually sell a lot less boat engines but it would still be a lot of money.

 

[LittleWolfie]

We bought a bunch of vending routes from an older owner that was having health issues. He spent a lot of time helping us, showing my boys how to do things, and really just wanted to make sure that his customers were taken care of once he was out of the picture.

This is a HUGE untapped resource. Find a market with a lot of boomers.

Hmm I wodner what else there might be beside vending routes.

 

[TheLearner]

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%.

 

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[ygtrhos]

Anybody from Europe, that did this?

Would love to exchange ideas.

 

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[Ing]

A friend s dad built a trucking company. My friend took it over with his brother. Now, decades later, there is no one wanting it. Btw, there a re some hundred trucks, so its quite big.
His daughter doesn’t consider it. Makes me sad.

 

[Bekit]

This long protracted thread has produced many good ideas, and I suggest that @Bekit's thought to "recreate many of the businesses that close due to bankruptcy or death of the owners" is a good one.

In some respects I speak as one whose business is closed - not due to bankruptcy or death, but due to the stupidity of an executive in charge of the takeover consortium that, as I posted earlier:

After a long period of "retirement" I have decided that I should re-start that highly profitable business, but to do it by guiding someone fresh, with fire in their belly and capable of rebuilding the business that is designed to do what I did:
1. Act as an industrial troubleshooter across the USA (and Canada if desired), finding problems and solving them with the use of my chemical products, even if that involves using new formulations that will fix the problems found.

2. Export the chemicals to countries across the Asia/Pacific region.

See Attached File: EDIT. The document below says Read On Below, so see 2nd attachment for that, but you should also look at my post below.

How I Made My First Million and the Next…….​

WALTER

What qualifications would make someone likely to be a good fit for working with you on this, Walter?

Sounds like an awesome plan!!

 

[Walter Hay]

See Attached File Rethink: This little appendage to my post was not there when I went back to add more information as promised, so firstly, here is that previously attached file, and following it is the more information as requested via PM.

The History of Faith Chemical Industries gives more details on how I got into the specialty industrial chemical business. It relates primarily to troubleshooting and supplying chemical answers to problems in the Panel Board industry.

Although the business operated in Australia, I have done extensive study on the industry in North America and know that it is vastly larger than the Australian Panel industry.

I invite questions, either in this thread or via PM.

Walter

 

[Kevin88660]

I had a friend that did something similar. She started working for a weld inspection and testing company. A few years later, the owner wanted to retire and his kids had no interest in the business. He owner financed the business for her and now, she's been employing marketing and online business strategies to build the business way beyond what it was before she took over!

There are many such opportunities arounds in different fields.

A business handed to you literally rather than built from scratch.

 

[Monkeycom]

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.

I cannot agree more. I think it's the biggest opportunity of our generation. Plus, the young generation can usually add value to the business via digitalisation.

 

[AmazingLarry]

if your side hustle is a hobby ..... you did what you could.
if your side hustle is to grow, it should take you less than 30 sec to answer your question and less than that to reach out and try to grow your business.

Yeah, the past few months I've been focusing a lot on growth, so I've been reaching out to different categories of potential clients to see who has the most common occurance of need for my services. I was surprised to find that most of the interest was from existing consultancies looking to offload extra work (vs manufacturing businesses that need custom equipment designed). I haven't come across any older folks getting ready to leave the game, but it does seem like that would be one of the best places to focus.

 

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[Deleted78083]

Simple yet effective, this idea is golden!

 

[Guest1413tpa]

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...

 

[Guest1413tpa]

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!

 

[HBB]

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.

 

[HBB]

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

 

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[PapaGang]

I saw this post and instantly wished that a service like that existed.
As I was going through this thread, I kept wondering "but how do I find these people who would sell their business"

Interesting to see that need peeking into my mind where I the pushed it aside and kept mindlessly scrolling...

I was discussing this idea last year to a colleague who shot it down.

I think there is a real need for this sort of thing and traditional brokers don't seem to fit the model.

 

[Isaac Odongo]

Something to think about.