I was invited to a webinar on the Silver Tsunami the other day. It was interesting. The webinar was about the fact that the people born between 1946 and 1964, known as the Baby Boomer generation, are the wealthiest generation in Australian history. According to the ABS, about 5.7 million Baby Boomers in Australia make up about 22% of the population. The ABS reckons that around 800 baby boomers are retiring every day. A detailed study is here.
So over the next ten years, it is expected that we will see the most significant transfer of wealth in Australian history. This is called the Silver Tsunami.
Why does it matter for small businesses?
The silver tsunami has significant implications for the small business sector, a vital part of the Aussie economy.
According to a report by KPMG, baby boomers own 40% of all the small businesses in Australia, which is around 420,000 businesses. These businesses employ about 1.4 million people and generate about $500 billion annually.
This means we can expect many more small businesses on the market than usual up for grabs in the next decade as baby boomer owners look to retire or cash out. We are looking at a buyer's market, where potential buyers can negotiate better prices and terms for acquiring a business. Although Generation X (born 1965-1979) will have a lot of money, it is not expected to compensate for the increased supply.
How can you prepare for the silver tsunami?
If you are a baby boomer business owner who is planning to exit your business in the next decade, here are some tips to help you prepare:
- Five to ten years is a long time in business.
- Do not panic as we are already in it,
- Start planning. Ideally, it would be best to start planning an exit strategy to give you enough time to maximise the value of your business.
- You should seek professional advice from your accountant.
- An exploratory discussion with a business agent would help. Find a good one, and they will tell you now the score and what they see in the future.
- Now ask yourself what I can do to give this business marketability in five years. For example, in my observation, a lotto agency with gifts is much more marketable than a gift shop, even if they are equally profitable.
- A business plan would help.
The silver tsunami will significantly impact the Aussie business scene in the next decade.