Why You Should Buy a Business from a Retiring Boomer – Especially in Insurance
It’s no secret that baby boomers are getting to retirement age. In addition, many of them started or bought into a business and are getting ready to sell. As a result, these Baby Boomer business opportunities create the perfect storm for younger entrepreneurs. Especially those who want to get into their own business without the high risks of starting their own. After all, the vast majority of businesses will fail within the first five years. That’s a high risk to take for such a large investment of time and money.
There are several reasons why you should consider purchasing a business from one of these baby boomers looking to retire.
First, you can feel confident going into an existing business knowing that it can be successful. You will be able to evaluate all of their financial records to make sure that the business is a sound investment. This means you take on less risk and it also means that finding funding can be significantly easier. Banks are more likely to lend to someone buying an existing business. This is because businesses with existing financial data are easier to predict than a brand-new business.
Next, most purchase prices take into consideration existing client revenue. The purchaser needs the ability to cover the money owed to the previous owner. As a result, you should have cash flow from retained clients right away. Moreover, your sales should be able to not only cover your expenses, but also to give yourself a reasonable salary as well.
Starting your own company typically means scraping together every little bit of cash that you can and barely making it by for the first several years. Looking at these two alternatives, purchasing an existing business may seem considerably easier and less stressful than trying to make it on your own.
For example, if you are going into a financial industry, such as insurance, your business purchase will often include existing customers. This book of business will generate revenue for you right away.
Next, people sometimes suggest that it’s cheaper to start your own business than to purchase one. However, when you take into account all of the different factors, it is not. For example, when you consider owning and operating a business there are always risks associated with it. As a result, purchasing a business with existing cash flow is typically the less expensive and less risky option.
The proven business model of an existing business means that you don’t have to stress over every detail to ensure it is profitable.
One of the most difficult things of being a business owner is hiring good employees and training them to do a good job. Assuming that the previous owner has done a good job with their employees and that you can maintain them during the transition, this difficult aspect will already be done for you. This goes beyond just your current employees and their skills. As you hire on new employees the work ethic, attitude, and skills of the current employees will help bring out the same expectations with new hires.
Focus on Growth
Current sales numbers dictate the purchase price of an existing business purchase. Given that your numbers should be able to cover all of your expenses, and leave enough left over for you to live off of, you can start focusing on growing and improving your new business. This means that you can take steps to increase your profits and your return on investment. This means doing things such as generating new products or services. Additionally, it means improving your website and making more connections within your community.
With an existing business, they will have already developed a brand. You can use this to evaluate how happy current customers are with the services or products provided. In addition, you can make sure that you’re purchasing a business that lives up to your standards. Assuming that this business has done a good job of maintaining a good brand name, you will have less legwork to do. Creating a good brand name takes a long time and reviews can be hard to get in the early stages. So, don’t overlook this as an advantage of an existing business.
Buying an Existing Customer Base with Baby Boomer Business Opportunities
Finally, by purchasing an existing business, you don’t have to do the initial work of creating a loyal customer base. This will already have been done and they will likely continue on past the sale. This phase of building customers can take years and if you arrange with the seller to stay on for some time after the sale to help with this transition phase, you can purchase the business and continue with little changes in sales volume.
Baby Boomer Business Opportunities Actions & Conclusions
A big change is getting ready to happen; 72 million baby boomers are approaching retirement and a lot of them own small businesses. The challenge for them now is what to do with their business. The younger generations should be ready to step up and buy them. However, this doesn’t seem to be the case. Without new owners to generate income and jobs within their community’s small towns may hurt from this change.
As has happened with every major milestone with the baby boomers this change will be big. Being ready and willing to take advantage of such a major change in the economic standing of the United States can be a huge starting point for someone with the right mindset. In summary, for those young people who have an entrepreneurial focus, purchasing one of these businesses could be a great start to a happy and successful future.