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Aging Workforce: Asset, Liability or Succession Opportunity?

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Manpower suggests that using specialized retention and recruiting strategies will allow you to target the single largest available workforce segment – those over age 50. If you are looking for people to staff our business and you are ignoring the 50+ worker you could be in for a tough ride.

Training programs – Mature workers are lifelong learners, and programs that build skills and increase employment opportunities will positively impact employee engagement.

Flexible scheduling options – Studies confirm that non-traditional schedules are one of the top priorities for older workers. Policies that offer part-time, flextime, job sharing, project work or generous time-off plans allow those in their retirement years to have ample time for work and personal pursuits.

Job redesigns – While mature employees want to work, many would elect to bring value to an organization in a different capacity. Whether it’s less travel, fewer responsibilities or a decrease in physical demands, consider job accommodations in order to retain the institutional knowledge and skills of the most experienced employees.

Targeted recruiting strategies – As with any hiring plan, employers should consider how to reach people in the demographics that meet their needs, and older workers are no exception. Look to professional organizations, company-sponsored alumni groups and online communities for possible candidates. Via Aging Workforce

I would want to see what I could do to take advantage of this large labor pool before their Business Dreams and Retirement Collide.

What do you think? Are you now or will you use any of these strategies?

Baby Boomer Retirement Trend - Entrepreneur 2.0?

If you are 50+ and born between 1946-1964 and an active entrepreneur you are being called a Entre-Boomer and in a piece titled Going Your Own Way Entre-Boomers are discovering the world of entrepreneurship just as they are about to enter their retirement years.

Why the Strong Interest in Entrepreneurship?

Because many Boomers think that selling their experience via consulting as their best path through the entrepreneurship maze.

A 2005 Merrill Lynch survey found that the unpredictable cost of illness and health-care is by far boomers’ biggest fear. They are about three times as worried about a major illness (48 percent), their ability to pay for health-care (53 percent), or winding up in a nursing home (48 percent) as about dying (17 percent).

A Free Agent

There is no doubt that becoming a “free agent” and selling your services creates cash flow it is not a business model that will create wealth for most seniors. However, if you buy a business and then build an exit strategy it might be just the ticket to help you earn some extra income. Another option is to continue to operate a healthy business well into retirement.

In addition, a CGC analysis of government data shows that those 55 to 64 and older represent one of the fastest-growing groups of self-employed workers. Some 1.8 million American workers ages 55 to 64 are self-employed outside of agriculture, up 29 percent from 2000, according to the Labor Department. The number of do-it-your-selfers 65 and older has grown 18 percent to 756,000. And boomers 45 to 54 years old make up more than a quarter of the nation’s 9.6 million self-employed. Overall, boomers and older entrepreneurs now account for 54 percent of self-employed workers, up from 48.5 percent in 2000. Via Going Your Own Way

So if you have been thinking about making your hobby a business or your business into a hobby or just want to take a stab at the entrepreneurial game you are in good company.

Baby Boomer Entrepreneurs Making an Impact

Hugh Hefner may not be a Baby Boomer but USA Today thinks he is the poster boy for aging entrepreneurs. So why are baby boomers seeking self-employment at a time when they are supposed to be slowing down and enjoying life? According to USA Today it is because of:

• Corporate Layoffs: they would rather take the risk of owning a business rather than get forced into the job market after age 50.
• Shifting Values: they want more flexible schedules to spend time with aging parents or on hobbies while easing into retirement.
• Aging Population: The number of Americans age 50 and up will soar by 31 million by 2020, to 118 million, the Census Bureau predicts.
• Innovative Technology: Many start-ups by older entrepreneurs are one-person ventures in home offices with a dizzying array of technology that didn’t exist or was too pricey 20 years ago.
• Business Savvy: entering their 50s, leverage management skills and retirement benefits to invest in start-ups.

I am a baby boomer myself and enjoy coaching baby boomers who want to start or buy a business.

Baby Boomers Starting Real Businesses in Retirement

No surprise to me but Business Week says that Lure of Entrepreneurship Beckons Boomers and their observations include:

• Corporate Jobs Too Insecure.
• Business Experience Reapplied.
• Other Self-Employment Ingredients: pension cuts.
• 97% of baby boomers are in the top 50% of population by net wealth and are twice as likely to pursue self-employment.

Plus they have a total of eight in-depth articles about Baby Boomers foray into entrepreneurship and you can view my nineteen articles in Baby Boomer Business category.

[M]any boomers–or those 78 million Americans born between 1946 and 1964–are leaving corporate jobs to start their own businesses. And it’s not just because they’re ready to retire; though some have the time and money to try life as an entrepreneur, many don’t. They…are often worried about disturbing corporate trends like layoffs and pension cuts that are leaving many in their age bracket with a tough road through retirement.

“Baby boomers are looking at starting real businesses–looking for another 10- to 12- to 15-year career, God willing,” says Paul Magelli, senior scholar-in-residence at the Kansas City (Mo.)-based Kauffman Foundation. Via Entrepreneurial Mind from Business Week.

Options for Baby Boomer Business Owners

The single largest demographic segment, baby boomers, are now between the age of 50-74. This represents a significant business opportunity look at these statistics:

• As of 2005 50% of the population was between age 50-74, (Source: AARP)
• A baby boomer turns 50 every 7.5 seconds.
• 1.5% or 480,000 of US businesses are given away (family, employees) every year. (source: Characteristics of Business Owners, US Census)
• 3.1% or 992,000 businesses change ownership each year (source: Characteristics of Business Owners, US Census)

Is there a Retirement Crisis in the Making?

Baby boomer business owners’ greatest problem is to figure out a way to retire and extract the equity they have built up in their businesses. For many baby boomers, that will mean selling their businesses and converting their equity into cash or retirement income.

The Sellers Concerns

A sellers greatest concern is how a buyer will finance the purchase of the business followed closely by making sure that the buyer is a suitable candidate and a good leader and whether they can get a good valuation of the business. They also spend a lot of time worrying that the business is too dependent on their leadership and involvement.

Most business owners are so highly involved in the operation of the business it is difficult for them to see how it could operate without them. Our coaching process helps business owners to put the systems, structure, and processes in place so they are free to sell the business, keep it, or grow their own successor.

What is a Succession Plan?

According to Wikipedia a succession plan is:

Succession planning is the process of planning appropriate action in the event that a key person within an organization is no longer available to the organization. Scenarios that cause or contribute to this key person no longer being available may be voluntary/anticipated, or involuntary/unanticipated. A “full succession plan” addresses both situations, while a “partial succession plan” addresses only one type of scenario or event.

Almost two-thirds (65%) of businesses have no succession plan and 28% stated they had “no time to deal with the issue” (source: CFIB, Succession Can Breed Success).

Supply and Demand

There is a 50% chance that the person you will be buying your business from is a baby boomer. They have a liquidity problem that is created by one simple economic principle: supply and demand.

Like anything else, supply and demand affects the sale price of a business. The more buyers (the greater the demand), the higher the asking price. Fewer buyers will result in lower sale prices. If baby boomer business owners all try to sell their businesses at the same time, there will be an oversupply of businesses for sale - meaning that asking prices will drop as finding a buyer becomes more difficult. The implications are vast. Without a succession plan or buyer waiting in the wings, baby boomers will struggle to get the full value out of their businesses. This will be bad for the baby boomers, but good for you as a potential buyer.

Options for Baby Boomer Business Owners

1. If they have not planned their business succession in advance, and they’re unwilling or unable to liquidate at a lower price, they may have to continue to work well into retirement. With post-retirement life spans of 25 years or more, baby boomers will need to keep working to ensure they have adequate retirement funds to maintain the quality of life they have become accustomed to.
2. If they have not saved enough money to fund that long retirement, baby boomers may decide to keep running their businesses into their retirement years. If this happens on a large scale, the supply of businesses for sale will drop dramatically, and prices will rise. This doesn’t mean that potential business buyers have no hope, but it does mean that you will have to get creative to find a business owner willing to sell you the business that is funding his or her retirement dreams.
3. Another option is to grow your own successor. As the labor market continues to tighten this option may become increasingly popular because it allows you to groom, train, and develop the ideal buyer for your business.

There’s no way of knowing for sure what will happen as baby boomers retire, but in any event their actions will impact the business landscape. For that reason, it’s important to keep this demographic in mind as you consider buying a business.

If you are a baby boomer business owner and are concerned how to:

• structure your business to enable your retirement.
• want to prepare your business and put it on the market.
• buy a business.
• learn how our coaching services can help you make more money and have more freedom.

Retirement: Top Five Options for Cashing Out

Thinking about retirement and wondering what your options are? Other than shutting down or liquidating your business, there are at least five options to consider. Depending on your personal situation your best exit strategy could vary greatly.

Sell: selling your business is in many ways the simplest approach, especially if you are ready to walk away and take your cash with you.

• Pros: Get cash out quickly if you can find a buyer. Completely divest yourself of all responsibilities and obligations.
• Cons: Lower return on investment than other options.

Merge: teaming up with another business by merging will create certain economies of scale, increased competitiveness, and new opportunities gained as a result of two experienced business owners collaborating and cooperating.

• Pros: Combined and shared skill sets that can create greater efficiencies, increased buying power, and better quality of life due to shared workload.
• Cons: Less control as shared management requires cooperating and working with a business partner.

Management Buyout: the more dependent your business is on you the less attractive it is to a potential buyer.

• Pros: Using the assets of the business as collateral you can combine borrowing and the equity in the business to fund the buyout.
• Cons: A management buyout only works if you have capable management that has the vision, drive, and talent to buy the business and continue its development and growth.

Employee Stock Ownership Plan (ESOP): like a management buyout an ESOP has tax advantages for buyers and sellers. With solid tax planning and strategic negotiating this approach can end up putting more dollars in your pocket.

• Pros: Tax-free Employee Stock Ownership Plans (ESOP) buyouts let the management team use pre-tax cash flow for the buyout and you could end up getting a greater return on your investment too.
• Cons: Requires skilled professionals (accountants and attorneys) to assist with setting up the ESOP and do the tax planning work.

Remote Control CEO: If you have your health and are not ready to sell or walk away from your business becoming a Remote Control CEO is a terrific option. It allows you to keep control, maintain your income, and do it all while pursuing your lifestyle goals.

• Pros: Keep control of the business while you continue to draw income. This option can provide opportunities for extended travel, start another business, or work a day or two a week which frees up time for a favorite hobby. Assets of the business continue to grow based on the efforts of your management team.
• Cons: Requires capable and trusted management team that can continue to grow the business without your presence. Mature marketing, management, operational controls, and tracking tools are required to monitor business health and development.

First Step: Write a Business Plan

I think you can see that there are a number of options, all of which benefit from business planning.

Writing a business plan is a great place to start because the process will provide you with the information you need to choose the option that best fits your lifestyle, market opportunities, and business situation. My newest book, Tips and Traps For Writing an Effective Business Plan, will help you write that business plan.

Live Large!

Budget for Thinking Time

Dave Pollard makes some great observations about the skill of thinking. Dave asserts that thinking takes time and…

Thinking is a skill, and like any skill it takes considerable and continuous practice. My sense is that those of us who are paid to think are mostly pretty rusty at doing it. Via How to Save the World

For those service based businesses trying to figure out how much to charge for their services, make sure to include the time you will spend thinking.

I included thinking time (aka downtime) into the prices I charge, otherwise I would not be an effective coach for long - I would burn out.

You Cannot Do It Alone

Dave also states that if you want to have time to think you will need the cooperation of the people you work with.

By listening to and observing staff instead of telling them, we empower them to learn more about what works and how it fits with what others do and need. And it frees up management time for thinking. One person can’t do this alone — it requires an entire workforce that can self-manage and function in a flat and largely unsupervised environment. Do this with the wrong staff and you’re a goner — the power vacuum will be filled by the (probably unqualified) person with the biggest ego, as others willingly allow him/her to take the fall for all the incompetent decisions that ensue.

But in the right organization, self-management can produce amazing results. An organization whose people all have the time and capacity to think effectively, and the authority to act on that thought, will trounce their competitors. Who knows, they might even create a model for a better workplace, and go on to change the world. Aha! Via How to Save the World

Self-directed, self-motivated, and caring people can revolutionize your business and the world. Keep up the great work Dave.

Recommended Book

• Think and Grow Rich: The Landmark Bestseller–Now Revised and Updated for the 21st Century

What is a Remote Control CEO?

A Remote Control CEO is a business owner who has made or wants to make the transition from hands on to hands free, lives a flexible lifestyle, and has structured their business so it works for them rather than them working for the business.

Greg Balanko-Dickson is a licensed professional business coach that can help you start a second act business, sell your business, buy a business, groom a successor, and help you structure your life and business on your own terms.

Does your business run under it’s own steam?

If not, then your business is dependent on your energy, drive and enthusiasm to make things happen. For your business to run without being dependent on you, then you, your staff and the business must become more effective.

To become more effective you have to make a transition from being ‘Hands On’ (at the center of everything) to creating the structure so you can operate the business ‘Hands Free’ - By Remote Control.

Wait, before you leave because this sounds a little too trite and simplistic let me tell you why you should continue reading. It was a strategic mistake that lead me to stumble upon a distinction - that by increasing the ‘effectiveness’ of myself, staff and the business - any business owner could make huge gains!

Except I did not know I had become complacent…

Complacency can kill your business. It kills your drive, decreases your energy, and makes your mind numb to the obvious. If you have been in business for any reasonable length of time you know the feeling, an overall sense of anxiety and concern about the business.

I often hear business owners state that they feel burnt out, tired, fed up, and frustrated. It can include concerns about profitability, making the next payroll, staff performance, or customer satisfaction. You are not a quitter, so you suck it up and tell yourself that if you work a little harder things will improve - this is a trap.

Working ‘harder’ traps you on a treadmill…

Profitability, human resources, and lack of free time. These are issues that I hear business owners scream HELP ME! on a regular basis. The reason their business does not operate without them being there is because they did not take the right actions - they are stuck in the center of the business.

Every business book, seminar, and consultant will tell you that you have to make a transition from working ‘IN’ the business and start spending more time working ‘ON’ the business - except they do not tell you how to do it!!

Until Now.

To enjoy the benefits of operating your business by remote control, you need to make the transition from being ‘hands on’ to ‘hands free’. Perhaps your goals are to:

• raise the bar on overall company performance.
• make more money.
• pursue a new business opportunity.
• concentrate on the systematization of your business.
• prepare your business for sale.
• buy a business.
• improve some aspect of the business.
• transition your business for future generations.

To achieve your goals it’s all about…

Taking the right action, at the right time for the right reasons i.e. replacing yourself with systems, processes, staff training, and leadership (to name a few). That way you will no longer at the center of everything and are able to operate your business ‘hands free’.

What you can expect working with Greg Balanko-Dickson

I am not one of those fancy consultants who do a report that ends up on your shelf, or make a speech to get you excited for a couple of days and subsequently leave you stranded.

In fact, I become a part of your team and your success becomes a part of my life and my passion.

If you choose my most popular program (the coaching program), I will meet with you on a regular basis (either weekly or semi-monthly) for a minimum of 12-18 months to teach you some great business strategies, brainstorm with you, prepare specific strategies to move you forward, hold you accountable, and move you to where you want and need to be.

We will take the right action, at the right time for the right reasons!

Visit this link to a few read case studies of how coaching has helped past clients.

You will be exposed to over 450 business development strategies

Questions, inquiries, and suggestions are always welcomed, please call me at 1-866-281-8281 or email me.

Sincerely,

Greg Balanko-Dickson, LPBC

P.S. More about Greg Greg Balanko-Dickson is a third generation entrepreneur, author, podcaster, and a Licensed Professional Business Coach (LPBC). Greg has programs to help you start a business, buy a business, operate your business by remote control. He has worked with 100’s of business owners in more than 30 different industries including pharmaceutical, biotechnology, oil field, manufacturing, retail and wholesale to name just a few. [Click here to view Case Studies]

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