The Boomer SME Saga: The Final Chapters

Small Business Canada

By all appearances, Boomer SME retirement officially appears to be a non-event. Apathy and complacency have dumped this critical and inevitable reality into the shadows of denial along with another critical element of our way of life: Democracy! Each needs our attention!

The Boomer SME Saga: The Final Chapters

By all appearances, Boomer SME retirement officially appears to be a non-event. Apathy and complacency have dumped this critical and inevitable reality into the shadows of denial along with another critical element of our way of life: Democracy! Each needs our attention!

It’s like Joni Mitchell’s Big Yellow Taxi lyrics, “…you don’t know what you’ve got, till it’s gone!” If we don’t pay proper attention, we can easily lose our accepted way of life: a unique combination of individual capitalism and middle-class dominated Democracy!

Our once-sacred democracy has sunk to new lows as a small base of modern-day Bolsheviks, aided and abetted by big business interests, has unleashed a deplorable, divisive, and disruptive version of politics. The “rabble,” as dubbed by Napoleon Bonaparte, has elected those seen as “one of their own.”

Now, more than ever, politicians are seen as serving special interest groups. Most owe their election, and thus their souls, to big money interests that are viewed as self-serving! In big business, ceaseless performance demands have given rise to a visible lack of ethics, integrity, and escalating cultural dishonesty.

The big business version of capitalism has, all too frequently, brought out the worst in individuals!

Need proof?  Look no further than TV’s nightly news, highlighting the misconduct of arrogant corporate CEOs and the bombast of political reprobates! Big money! Big egos! Bad news!

Traditional leadership role models have been largely replaced with self-serving predatory leadership devoid of conscience, or a moral compass! Sadly, it’s incredibly widespread!

The media response has concentrated myopic attention on the resulting political and executive corruption. The public response is complete apathy and complacency to what they see as distrustful, tainted, and unworthy capitalism!

To add insult to injury, the divisive proponents of alternative truth and fake news have usurped long-held values and principles; truth, honour and respect for others, as though they were meaningless!

Ironically, those values were forged from the ashes of World War II, where right and wrong were quite clearly defined.

A tiny segment of this Boomer population, born in WW II’s aftermath, used those values to create an economic miracle: A version of capitalism significantly different from that of big business!

This SME version is the only business model where little people can dream big… and with nothing but determined belief in themselves, turn those dreams into reality and in doing so, gain control over their destiny!

An atmosphere of trust, built on a foundation of honesty and fair dealing, allowed visionary SME leaders to create and collaborate on innovation that blossomed into widespread economic prosperity such as the world had never seen.

The North American SME Entrepreneurship Saga is the greatest untold story of wide-spread economic success in history! That’s because the final chapters have yet to be written!

A surprise ending awaits all! Will it be Happy Days or the End of Days? Either way, that surprise ending unofficially promises to become “the seismic event of a lifetime!”

Before we look ahead to see how each of those SME Saga endings might potentially unfold throughout North America, let’s look back at officialdom’s take on Boomer retirement in both Canada and the U.S. We can then extrapolate that data to explore potential Boomer SME owner outcomes.

In terms of SME comparison, what is true in one country is equally true in the other. While the numbers differ, their respective SME environments reflect each other, to within 1%.

Twelve years ago, in 2006, a CFIB SME Retirement Study revealed that 70% of SME owners wanted to retire by 2020 and that 66% needed to sell to help pay for retirement.

Also in 2006, the U.S. Bureau of Labor Statistics projected that within that same timeframe, its workforce would increase by 2% per year (35 million new entrants, mostly Hispanic immigrants). It also predicted 27.2 million workforce exits by 2016.

Here is what actually happened: From 2007-2014, there were only 12.6 million workforce exits. Only 5.5 million actually retired. Another 2.9 million became disabled (80% Boomers). The rest were sidelined by the 2008 Financial Crisis.

Also, new worker entrants declined by 0.75% per year (10 million fewer workers). Overall, the workforce was projected to grow by 7.8 million workers (35.0 M – 27.2  million).  They were wrong!

Ironically by 2016,  instead of the projected 7.8 million additional workers, it appeared that the workforce had grown by 14.6 million workers!

What masked this glaring miscalculation was a delayed retirement decision by almost 15 million Boomer workers. If that had not occurred, U.S. politicians would be trying to explain the consequences of a shrinking workforce. Instead, they have bragged how their mere presence has created employment!

For the record, here are the 2017 predictions: Statistics Canada estimates an average of 428,000 workforce retirements over each of the next 4-5 years (2+ Million).

The U.S. Bureau of Statistics estimates 28.3 million workforce exits and 38.7million new worker entrants by 2026  (mostly Hispanic immigrants). If Hispanic immigrants did not show up before 2016, are they more, or less, likely to even try under the current political agenda?

U.S. officialdom has repeatedly projected the same average numbers over a 20-year time span, thus far highly inaccurately! Boomer retirement is still officially considered a non-event! When you consider all this, can we afford to take official wisdom seriously? Some of it …yes!

Here is what I see: Annual 2% workforce growth from immigration does not appear realistic. Retirement projections should hold up.

By 2021, 1st wave Boomers begin to turn 75, and 2nd wave Boomers begin to turn 70 and will reach 75 by 2026. Between age 70 and 75, the realities of ageing begin in earnest, affecting memory, energy, and overall health. Thus far, the average retirement age is around 70.

Overall, some 30 million, or 66% of total Boomer North American retirements are expected between now and 2026. An orderly retirement transition would average 30,000 a day from early 2019 to 2022, and only 10,000 per day if retirement is delayed until 2026. Reality will be anything but orderly, and somewhere in between those numbers!

Our worst case scenario: if only 10,000 retire daily before 2022, another 20,000 retirements are delayed. That translates into an additional 5 million workers per year stacked up against what I call the inevitable Wall of Time! Retirements are still inevitable, the only issue is when?

By 2022, that could potentially add an additional 20 million almost-retirees to the Wall of Time dilemma. Also, a new batch of Boomers achieves retirement age every year! This stacking process will continue until a breaking point is reached!

Mass retirements will unfold in disorderly multiples of the norm! Like a dam holding back a reservoir, when the cracks appear it is only a matter of time before a massive breach unleashes a flood or several mini-floods! Eventually, the entire structure collapses! The great unknown here is stress; not structural stress …workplace stress!

This scenario will more than likely cause employer hardship! The Canadian SME sector, employing almost 90% of the private sector workforce, and composed of 60% Boomer SME owners with typically more Boomer workers will take the worst hit. However, the U.S. will feel it too because their business sizes are quite similar. (73% have less than 9 employees, another 12.7% have less than 20).

What happens when SME employers lose 20-30% of their most experienced workers?

Alternatively, what happens when 35-50% of employees lose their employers?

The harsh reality: This entire demographic analysis applies as much to Boomer employers as it does their workers! (8.8 million North American SME employers employ almost 110 million workers).

Unfortunately, demographic statistics suggest that, by 2020, there could easily be a seller-to-buyer ratio of 2:1. It is, therefore, more than possible that 35%-50% of employer SMEs will have great difficulty finding a buyer!

That potential puts over 4 million Boomer SME owner retirements in jeopardy and, more importantly, 35-50 million additional jobs at risk. These are not part of the retirement story that will see 30-40 million workers retire. Collectively, that is far greater than the 25% peak unemployment seen in the Great Depression of the early 1930s.

Admittedly, this is a worst-case scenario. But, even if only half-right, the consequences are still economically devastating! Unless things change and change quickly, this may be all too prevalent in the SME sector!

So, will Boomer SME succession be a “non-event”  or potentially “the seismic event of a lifetime?”

SME owners, who have risked all to provide livelihoods for others, are about to face a host of multi-dimensional challenges associated with preparing for an inevitable new phase of existence: retirement! They want control, but are not ready; mentally or financially!

Those challenges include “holistic” succession planning; some tax-planning and consequential corporate re-structuring; finding a buyer; financing the sale; equity monetization; ownership mentoring and transition timing; and finally, funding and developing a semi/full retirement lifestyle!

How those challenges are dealt with will ultimately determine how that next phase of life unfolds; not just for SME owners, their employees, and families, but, equally as important, for the next generation of SME owners.

Despite the need to sell to fund retirement, over 10 of 13 million North American SME owners have no succession plan!

Thus far, only 16% of SME owners indicate a formal succession plan for inter-generational family ownership transfer. The remaining 80+% of SME owners, who have to sell, have been left on their own to figure it out by themselves! Consequently, they are like deer stuck in the headlights, not knowing which way to turn, or who to trust. Why?

Two Major Problems: 

1) The entire business support community has failed to anticipate SME owners’ evolving needs!

2) Boomer SME owners are in denial of an identity crisis!

The SME support community has specialized itself into silos of expertise that rarely talk to each other. There is no coordination of activities, no collaboration on potential solutions to identified issues! Each is focused only upon how they can make money within their specific mandate. They have no all-encompassing or “holistic” approach or succession planning process.

On the other hand, SME owners see the business, and their sense of purpose, as being one and the same! The thought of selling the business is like selling their souls! Thus, retirement is feared …as another form of death!

That has blinded SME owners from seeing a significantly more critical and detrimental reality as this Boomer retirement phase unfolds: They don’t seem to understand that:

1) The ultimate consumer society is about to retire and it has no replacement. Boomer children have lots of debt, but not money! The global economic backdrop will worsen as Boomers go into a necessary retirement spending mode.

2) SME owner’s interpretation of business value is typically double what the market will pay in good times.

3) “The plan” for millions of Boomer SME owners, all at the same approximate age, is to exit their business when they are “good and ready!” When too many try to sell the same thing at the same time, prices could realistically drop 50%  just like stock and real estate markets!

Picture this! Every 2nd or 3rd business on every street in North America will be for sale over the next few years!

4) The early bird gets the worm! Latecomers get crumbs!

5) Appropriate expert help can expedite success in every succession effort!

For developed world economies dominated by Boomer-owned SME sectors, demographics will come as a seismic event, shaking the very foundations of our accepted way of life! Unfortunately, this can only be prevented one SME owner at a time!

For Boomer SME owners, Demographics will soon unfold as the “personal surprise of a lifetime,” unless they decide to take control of their futures and meet this challenge head on!

If Boomer SME owners want a Happy Days ending to their SME Saga, then they must get started on understanding what is ahead of them, and what options and resources are available to help them get control of their transition into their next phase of reality!

Fred Dodd has authored Succession 2020-New Beginnings and has founded the Total Wealth Management Planning Process™ and Incipient Financing™, (both specifically designed to address the needs of SME succession) and is President of Success(ion) MMXX Inc. More information available on

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