Mississippi is facing an interesting intersection of generational challenges. On one hand, over the next 10 years, roughly 10,000 baby boomers per day will reach age 65. On top of that, researchers estimate that this generation owns approximately half of all privately-held businesses, so we will soon have a wave of businesses for sale as our state’s baby boomers gear up for retirement.
On the other hand, young Mississippians are leaving our state in droves. According to information compiled by Jake McGraw of Rethink Mississippi, the state lost a net of 42,000 people from 2010-2017, making Mississippi the only state in the Southeast to suffer a net outmigration during that period. Moreover, nearly 90 percent of those who left are under the age of 35, and many of them hold college degrees.
Therefore, while a multitude of Mississippi business-owners approach retirement, the state is simultaneously losing its battle against brain drain. But for those with an open mind, there is a unique opportunity: older, successful Mississippians should consider selling their businesses to younger, talented Mississippians, who currently live in places like Nashville, Denver, and Atlanta. It’s a win for everyone and here’s why:
The economics of this proposition just make sense. Business sales create a financial windfall that can be a major source of income during retirement. And even if baby boomers planned wisely and have enough outside resources, why wouldn’t they capitalize on a lifetime of hard work? That’s more money to leave for children or a worthwhile organization.
Likewise, millennials who purchase a small business gain substantial earnings potential. Even if they currently earn a great salary elsewhere, there is no ceiling as an entrepreneur. If they perform their due diligence and buy a good business, then their hard work will be rewarded. Their income will no longer depend on the corporate bonus pool; instead, it will reflect their own efforts.
Selling a business is more than just a cold and calculated business transaction. In many cases, it truly is a life’s work, so sellers want to make sure their legacy is protected. But from a practical standpoint, no one else will have the identical, lifelong experience of a company’s founder, so in a sense, they are justified in believing they are irreplaceable.
But there’s something better than a replacement: train up and sell to someone young and hungry with a different set of experiences, allowing the company to benefit from the founder’s experience and a fresh perspective. After all, while they work outside Mississippi, millennials gain experience and knowledge about industries and institutions that may not even exist here.
Mississippi business owners want a prosperous future for their company and home state. Implementation of a strategic succession plan achieves both because it brings new ideas to their businesses and an influx of entrepreneurs to our state. Innovation and growth provide continued success for individual companies and collective success for our state.
And many native millennials are looking for an excuse to come home. Their relatives are here, and it’s a good place to raise a family. But their careers just won’t allow it. Mississippi doesn’t have many of the high-paying jobs that exist in other states. However, the opportunity to buy a business would be a strong incentive for them to return.
Big ideas are only useful if they work. So can a baby boomer successfully sell a life of good work to a millennial buyer? Yes. And I can say that with absolute conviction because I’ve been a millennial buyer. In 2010, I moved back to Mississippi and purchased a CPA firm that I still operate today. We millennials are creative problem solvers, and that’s exactly what Mississippi needs.
Josh Norris advises individuals and small businesses on taxes, financial planning, and investment management. He also runs Good Work Advisors, which is a business brokerage firm.