2.3 Million Small Businesses Nationwide Owned by Aging Boomers Preparing To Retire Puts 1 in 6 Employees’ Jobs at Risk, Based on a Project Equity Study
Transitioning to employee ownership is an effective solution to retain jobs.
“…employee ownership is one of the best ways to keep thriving businesses locally rooted into the next generation,” said Mark Quinn, District Director, U.S. Small Business Administration.
Project Equity, a national nonprofit focused on economic resiliency, today released new data illustrating from New York state to California—and encompassing all 50 states—where businesses owned by baby boomers are likely to close or transfer hands in the next decade, and the industries most impacted. With 24.7 million employees currently employed by small business, the data is stark evidence that as small business owners retire in coming years, we can expect to lose many jobs and significant business tax revenue, and that many industries will be adversely affected. Conversely, this data also presents a positive indicator of the tremendous opportunity for business owners to transition their small businesses into employee-owned companies.
“What we know about small businesses is that very few (less than 15%) will be passed on to family members, others will be sold to a local buyer, still others to someone outside the local community,” said Alison Lingane, co-founder, Project Equity. “But many of them will just quietly close down and go away. Nationally, one-third of business owners over age fifty reports having a hard time finding a buyer. Those that are bought out by a larger company or out-of-area buyer will further concentrate ownership and wealth. We have the opportunity to keep these businesses locally owned and rooted for the long term by transitioning some of them to broad-based employee ownership.”
Project Equity compiled this data to educate the workforce and small business communities about the numbers of businesses at risk of closure or consolidation. “This data reveals how local businesses nationwide could be affected; it’s clear that not only will employees be impacted, but industries will as well,” Lingane said. “If we really want to ‘Make America Great Again,’ we have a tangible—and hugely impactful—solution in front of us for not only sustaining these businesses, but further improving the quality of their jobs through employee ownership.
The data presentation aims to make the business ownership changeover tactile, showing 2.3M privately-held businesses with employees—44.7% of the total—spread across the entire country and segmented by industry and by state. The data presentation also shows 24.7 million employees—an estimated one in six jobs nationwide, $5.1 trillion in total sales and $949 billion in payroll of these companies, to help paint the picture of the true impact of potential business closure or consolidation. The data are drawn from the most recent U.S. Census Survey of Business Owners (2012).
“Since today most family-owned businesses don’t have somebody in the next generation who wants to take over, employee ownership is one of the best ways to keep thriving businesses locally rooted into the next generation,” said Mark Quinn, District Director, U.S. Small Business Administration.