Blog

01.15.24

Buy a Business, Save a Town

Leslee Hill, Director of Woman's Business Center at NIIC

Over the next five years, the anticipated retirement of Boomer business owners will have significant impact on small-town economies in Northeast Indiana.  Many Boomer-owned businesses may close as owners retire, especially if there are no successors or buyers. This can lead to a loss of economic activity, jobs, and services within the community.

Small businesses are often integral to the identity of a community. The loss of long-standing businesses can impact the character and uniqueness of the town, affecting community pride and cohesion. If business closures lead to job losses, there can be a ripple effect on the local economy, affecting household spending patterns. Closures of established businesses can disrupt local supply chains and may lead to vacant commercial properties, which can contribute to a perception of economic decline.

To mitigate the potential negative impacts, NIIC business coaches can help communities take proactive measures, such as supporting business succession planning, encouraging business ownership among younger generations, and providing training and resources for new business owners, particularly around business acquisition.

There are several reasons why acquiring, or purchasing, an existing business can be a better business strategy for Millennials compared to starting a new enterprise, especially in the context of small towns facing the retirement of Boomers. Here are some key considerations:

1. Established Customer Base: Existing businesses often come with a loyal customer base, established relationships, and a reputation in the community. This can provide a head start over starting a new business, where building trust and customer relationships can take time.
2. Cash Flow and Revenue: Acquiring an existing business typically means acquiring an existing revenue stream. This can be crucial, especially in small towns where the customer base might be limited. Generating immediate cash flow from day one can help with operational expenses and ease the financial burden compared to starting from scratch.
3. Proven Business Model: An existing business has a track record and a proven business model. This reduces the uncertainty and risk associated with starting a new business. Millennials can analyze historical financial data, understand customer preferences, and identify successful marketing strategies, which can inform their decisions and increase the likelihood of success.
4. Infrastructure and Assets: Purchasing an existing business often means inheriting infrastructure, equipment, and other tangible assets. This can save both time and money compared to starting a new enterprise, where everything needs to be built from the ground up.
5. Experienced Workforce: An existing business may already have a trained and experienced workforce in place. This can be invaluable, especially in industries where specialized skills are required. It also reduces the time and effort needed to recruit and train new employees.
6. Local Regulations and Permits: Navigating local regulations, zoning laws, and obtaining necessary permits can be time-consuming and challenging. An existing business would likely have already gone through this process, saving time and potential headaches for the new owner.
7. Immediate Market Presence: Acquiring an existing business provides immediate market presence. This is crucial in small towns where word of mouth and community relationships play a significant role. Being a part of the existing business landscape can lead to quicker acceptance and integration into the community.
8. Financing Opportunities: Financing an existing business acquisition may be easier than securing funding for a startup. Banks and investors may be more willing to support a business with a proven track record and existing assets.
9. Adaptation to Changing Demographics: With the retirement of Boomers, small town demographics may be changing. An existing business can be adapted and repositioned to cater to the evolving needs and preferences of the new demographic without starting from scratch.

While acquiring an existing business has many advantages, it’s important for buyers to conduct thorough due diligence, understand the reasons behind the sale, and carefully assess the financial health and potential of the business before making a purchase.  Establish your team comprising a (NIIC) business coach, attorney, and accountant, and realize your dream of owning a business while enjoying an instant salary.