The Silver Tsunami of business owners seeking to retire soon creates an urgency for local communities to have conversations about employee ownership. When the owner of a small business (any business with less than 501 employees) is ready to retire, it can be difficult to find a buyer for their business. Not every business owner has family members to take on the business, and less than 20% of business owners have any kind of succession plan. Selling to private equity or a competitor can mean moving the business out of a community or letting employees go as a part of the acquisition or merger process. In communities where the number of soon-to-retire business owners is especially high, it can be an “existential crisis” for a community according to one retired SBDC advisor. These five Missouri counties have the highest percentage of baby boomer owned businesses in the state:
Harrison County, your last stop in Missouri on I-35 before entering Iowa, is home to 136 businesses owned by someone 55 years or older. This amounts to 78% of all privately-held businesses in the county.
In Grundy County, bordering Harrison County to the southeast, 82% of privately-held businesses are owned by 55+ individuals.
Dallas County, less than an hour’s drive from the heart of Springfield, is third on the list with 87% of privately-held businesses owned by someone 55+.
The two counties, Reynolds and Putnam, with the highest percentage of baby boomer business owners, are tied at 93%. Reynolds County is located in the heart of the Mark Twain National Forest and Putnam County is on the Iowa border, two counties east of Harrison County.
If we were to take a closer look at some other data on these counties from the 2020 U.S. Census, such as poverty rate, median household income, or the percentage of individuals without health coverage, the urgency to discuss exit planning with these businesses only increases. If a significant number of these business owners create an ESOP or a worker cooperative from their business, however, they could drastically change the future of their communities.
Transitioning to employee ownership would give all of the employees represented by these businesses the benefit of business ownership, one of the lead drivers for generating wealth. Employee ownership would keep the businesses, along with their jobs, payroll, economic impact, and tax revenue in their hometowns, while also allowing the current business owner to retire with a fair market value of their business. It would have the long-term potential of creating generational wealth in these communities, while making their economies more resilient to adversity. The list of benefits could go on.
Although these five counties all have less than 20,000 in population, they are not that much different than the majority of Missouri Counties. Only 31 of the state’s 114 counties have more than 25,000 residents. Across the state, 52% of privately-held businesses are owned by someone 55 or older. Employee ownership can be one solution for businesses and communities of all sizes. It’s worth having the conversation now in order to care for the communities we love in the future.