From The Blog

A few years ago, three partners of a local CPA firm sat around the table talking. All of them were Baby-Boomers in age and they talked about what would happen to their 20+ person firm after they retired.

Two choices seemed logical. One, they could entice a larger firm to buy them out or, two, they could hire and train staff to replace them. Either choice required work to build value in the firm and maximize the anticipated “sale” of the business in the future.

At some firms, seasoned Baby-Boomer partners are preparing to exit within the next ten years. They may have children (or grandchildren) in the family who are being groomed to take over the business.

(Eighty-four percent of multi-owner firms surveyed in 2016 by the American Institute of CPAs said they believe succession will be a big issue for them in the next decade.)

Plan

Planning your future exit from the business can differ depending on the size of the business.  Regardless of the industry you are in, training future partners in advance is important for Baby-Boomer entrepreneurs to plan for.

Some businesses include mandatory requirements in written agreements, describing how an outgoing partner must transition clients to work with their replacement.  Partners or co-owners who opt to sell their part of the business may encounter roadblocks because the market is saturated in their area of expertise. This poses a challenge for soon-to-be retirees and their firms.  Planning in advance will increase the probability of a successful sale for those who hope to sell their career-long business at an acceptable price.

Young professionals who are looking to buy in to an existing business must be sensitive to business founders approaching retirement, as many have spent their careers building their firms and may be hesitant to step away.

Opportunities

If you are a young Millennial looking to buy out the owners or you’re a partner or co-owner who is planning on retiring soon, open and ongoing communication is a key element to successful transition.

At some firms, particularly those providing professional and technical services on things like taxes and financial matters, owners can decide to expand their firm now to avoid a leadership gap when they retire. The business might establish specialties in specific areas so that the founder can appoint younger talent to lead in those niche services.  Existing owners may think about when to strategically give notice of retirement to co-owners, so that younger leaders have a firm timeline for when they’ll become partners.

In one business, with a staff of about 10, the co-owners re-organized to have multiple people serve a single client.  This makes a client more likely to stay with the firm when the founder or co-owner leaves the firm.  Ten percent of multi-owner CPA firms surveyed by the AICPA in 2016 reported that they’ll likely look to merge with another firm after their current senior owners retire.

In a merger situation, large firms may shop for specialty expertise in smaller businesses, related to their industry.  They’re likely to ignore a firm without a strong niche. Firms who avoid technology, like using paper instead of cloud-based systems, may drive away interest from a potential buyer.

Ten years ago, small firms most often merged with larger organizations because they lacked a succession plan.  That’s changed, with many firms now merging as a strategic move. Large firms may offer pricey technology, for example, that small firms need so that they can compete and reduce costs.

Summary

As Baby Boomers retire, younger entrepreneurs have immense opportunities to buy into a solid firm.  However, generations may clash. For example, a retiring founder may choose to meet with clients face-to-face, while on the other hand incoming partners could pick email communication.  There is a huge opportunity for multi-generations to learn from each other on those fronts.  However, buy-out deals can fall apart because of different philosophies on how to do business.  Planning in advance will mitigate fall-out and maximize returns for the founder(s) when they are ready to exit.

Experience success!


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

According to the Pew Research Center, 38% of daily newspaper readers are ages 55 to 64, while 50% are older than 65.  People 50 years and older watch the most television, Nielson reports.  Baby-Boomers were born between 1946 and 1964.

Top Magazines Read by Boomer Women

Many of the top 20 magazines in the U.S., according to Statista, have significant female boomer audiences.  (Source: www.ama.org – Sept. 2016)

AARP reported reach of 44.78 million readers.  59% of readers between the ages of 50 and 69 are women.  Below are stats reported by AMA for other top magazines:

People
77.5 million readers
73% are women
32% are Baby-Boomers

Better Homes
48.12 million readers
81% are women
51.5% median age

Time
45.52 million readers
48% are women
50.0 median age

Digital Savvy

The younger end of the Boomer age range may be computer-savvy, while the older end may be less compelled by digital outreach. The Nielsen report suggests younger boomers must be using the web: the 50-plus segment spends almost $7 billion online.

The internet is also boomers’ primary source of intelligence when comparison shopping for major purchases.

Today, the marketing focus remains on the younger generation. “I agree that 18 to 34 is still the celebrated demographic,” says Denise Fedewa, Leo Burnett’s executive vice president and strategy director. “There’s both ageism in our culture and ageism in our profession of marketing. But some of it’s not even malicious ageism. Some of it is just, ‘I want my brand to feel young and modern and youthful, and the only way to do that is to be targeting it to the young and modern and youthful.’ But that’s simplistic thinking.”

The Baby-Boomer age range also includes a variety of caretakers: some are still caring for their own children, some have taken adult children back into their home and others are caring for their parents. Baby-Boomer women are often in transition between caring for children and focusing on herself, which changes spending habits.

Willing To Change Brands

It is important for a marketer to understand the female boomer audience, to address certain myths.  For instance, that she’ll use the same brand of hair spray or soap that she started using at age 28.  Brand proliferation has completely changed the marketplace.  Research shows that Baby-Boomers are willing to try a new brand if there is better customer service, as opposed to a better price.

Willing To Spend

Are Boomers saving for retirement? Yes and no. We shouldn’t just assume that Boomers are only interested in saving their money. They’ve worked a long time to save their money and to spend their money.

They may be looking for something new such as a faster computer or sporty car or nicer furniture. It’s their turn now, after years of spending money on their kids.

Research shows that Boomers think of themselves as ten years younger than they are. They are not sitting around wrapped in a blanket in an old rocking chair. Boomers in their 50s are very different from women in the 50s when they were growing up.

Marketers typically use images of extremely active Boomers or very old, nothing in-between. Fedewa says, “It’s like they’re either showing Boomers as a feeble person who’s no longer relevant, or you’re showing them as this uber-in-shape person who can do what a 25-year-old can do,” she says. “That’s not relevant, and that doesn’t resonate with people, either. Those are some of the clichés we need to overcome.”

Universal Insight

There may be ways to reach the female boomer without specifically naming her or featuring her image. Fedewa ran LeoShe, a Leo Burnett effort that focused on marketing to women 45 years and older.

The study found that women took pride in their wisdom, experience and in feeling good about their current phase in life.

“Yes, it would be nice for society and culture to acknowledge boomers a little more, show them a little more inclusively, to include them in visuals and so on,” Fedewa says. “But there are also certain universal insights, certain formative times in your life, that people have. They continue to be able to relate to those experiences for the rest of their lives. I don’t want to say the only way to appeal to boomers is to show boomers or to portray insights about boomers, because sometimes it’s just human experience insights that will resonate with them, too.”

Fedewa says much of her work at Leo Burnett has considered the voice of the female consumer and the older consumer, and she also espouses the idea of changing the story. “We feel really energized by this opportunity to change the conversation,” she says. “We have almost taken it on as a mission for ourselves.”

Experience success!


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

Baby Boomers are those born between 1946 and 1964, making them 54 to 72 years old, and the U.S. Census Bureau indicates an estimated 74.1 million of them in the U.S.

Photo:  Carolyn Michael-Banks
CEO/Founder of A Tour of Possibilities, LLC
www.ATOPMemphis.com ~ at the LevelUp Conference 2018

The estimated number of Boomer women is 38.44 million. In addition to their existing assets, Baby-Boomers are set to inherit $15 trillion over the next 20 years. Add to this the fact that women drive 70% or more of all consumer purchasing.

Despite these figures, Nielsen estimates that less than 5% of advertising dollars are targeted to adults aged 35 to 64. According to the report, “Typically, once a group of consumers reaches the so-called ‘cut-off’ age of 49, marketers ‘go back to go,’” the report says.

Knowing more about Baby-Boomer women can help you market to them. 7+ facts:

1. Once the college bills are out of the way and children launch their own households, the discretionary spending power of 50-plus women soars. They spend 2.5 times what the average person spends. Women are the primary buyers for computers, cars, banking, financial services and a lot of other big-ticket categories.
– Marti Barletta, Primetime Women

2. Born between 1946 and 1964, Baby-Boomer women represent a portion of the buying public no marketer can afford to ignore. With successful careers, investments made during the “boom” years, and inheritances from parents or husbands, they are more financially empowered than any previous generation of women.
– Mary Brown, Carol Orsborn, Ph.D., Marketing to the Ultimate Power Consumer—The Baby-Boomer Woman

3. Over the next decade, women will control two thirds of consumer wealth in the United States and be the beneficiaries of the largest transference of wealth in our country’s history. Estimates range from $12 to $40 trillion. Many Boomer women will experience a double inheritance windfall, from both parents and husband. The Boomer woman is a consumer that luxury brands want to resonate with.
– Claire Behar, Senior Partner and Director, New Business Development, Fleishman-Hillard New York

4. The number of wealthy women investors in the U.S. is growing at a faster rate than that of men. In a two-year period, the number of wealthy women in the U.S. grew 68%, while the number of men grew only 36%.
– The Spectrem Group

5. Women account for 85% of all consumer purchases including everything from autos to health care:

  • 91% of New Homes
  • 66% PCs
  • 92% Vacations
  • 80% Healthcare
  • 65% New Cars
  • 89% Bank Accounts
  • 93% Food
  • 93 % OTC Pharmaceuticals

American women spend about $5 trillion annually…over half the U.S. GDP.

6. Women represent much of the online market – Digital Divas by The Numbers

  • 22% shop online at least once a day
  • 92% pass along information about deals or finds to others
  • 171: average number of contacts in their e-mail or mobile lists
  • 76% want to be part of a special or select panel
  • 58% would toss a TV if they had to get rid of one digital device (only 11% would ditch their laptops)
    51% are moms

Source: Mindshare/Ogilvy & Mather

7. Women and sports. Women make up:

  • 47.2 % of major league soccer fans
  • 46.5% of MLB fans
  • 43.2% of NFL fans
  • 40.8% of fans at NHL games
  • 37% of NBA fans
  • Women purchase 46% of official NFL merchandise
  • Women spent 80% of all sport apparel dollars and controlled 60% of all money spent on men’s clothing
  • Women comprise about one-third (34%) of the adult audience for ESPN sport event programs

Source – www.she-conomy.com

Here’s what research says, as provided by Jan Marino, BoomerCafe.com:

As the unofficial spokesperson I feel compelled to let you know what I’m hearing from 10K of my closest boomer friends. Here’s a list of ten things that we Boomers want and need from service providers:

  1. Explanations and education about your product or service intelligently delivered informing us why we should invest in your product. 
  2. Options about what the trend of the service/product is … i.e. what’s its “shelf life” 
  3. Engagement with us. We really want to mentor and help others not make the same mistakes we did. We may appear arrogant, but we’re not…we just don’t want to be ignored. 
  4. We want you to know that we control over 70% of the disposal income in this country and we have lots of places to spend that money. We won’t spend it with companies that ignore us or call us aged or aging (even if we are both … you don’t need to remind us). 
  5. Use clever and well thought out campaigns for marketing. Don’t be afraid to go mobile. Offer us deals and great products especially women’s clothing. We have lots of money to spend on clothing, but not many of us can wear a size 0 or show our midriffs. 
  6. We are health conscience and not as worried about our sex lives as ads claim. Help us stay in shape and look good. 
  7. Our pets are part of our family and we think they need stuff, so we’ll splurge on them. 
  8. Our parents are a huge part of our lives and we are taking care of them. Products and services that makes life easier for them and us will sell if treated in an intelligent way…. i.e. NO cold calling…form relationships with families. 
  9. Reinvention and career services that help us stay on top of trends and technology are imperatives. We want to stay well-informed, so we can talk to our children and grandchildren. 
  10. We still care about changing the world and philanthropy. Get large numbers of us interested in worthy causes. We fully understand that the earth’s resources are limited, and alternative methods hold great returns.


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

In looking back and planning ahead, I realized that in the year 2000, I had a million dollar estate.  This included about $250k in real estate, $250K in IRAs, and about $500K in stocks, bonds, and money market account.  This helped me get comfortable with leaving a corporate job and striking out on my own.  I formed a business consulting company in 2001 and began helping people write a business plan and forecast cash. Using my previous experience in working with numerous privately held businesses, both small and large, I learned how much I didn’t know.  Planning and writing a business plan is one thing.  Implementing the plan is another.

In 2003, I opened a retail store near the University of Memphis.  Originally this was a music store for independent musicians and artists to have a place to sell their original music or artwork.  The store evolved over the next five years into a coffeehouse which offered live music and original artwork.  The whole experience was a trip!  Even though the store is now closed, I don’t regret making that investment.  During that time I figured out a few things and for some of us, we have to learn by doing it.  We can read about, talk about it, listen to others, watch others, but we actually have to do it and make adjustments as we go to be successful at it.

Between the stock market decline, costly mistakes I made in running a retail store, and vacancies in rental property, I burned through most of my cash and IRAs.  So now I am working on making my second million!

Making money usually happens inch by inch, yard by yard, mile by mile.  So how did I start to rebuild cash?  When my store closed, I was looking at unpaid bills and credit cards with high interest rates.  Initially I used a green columnar pad to forecast how much cash was needed to make regular monthly payments and to repay credit card loans.  After landing a job which paid every other Friday, I sketched out when money would be coming in and what money had to go out.  Squeaking by for a few months by deferring payments until the very last due date, my credit report was not severely impacted.  I am now down to one credit card balance with three credit card lines open.  My spreadsheet includes money coming in from all sources (when and how much), expenses associated with one rental property, expenses associated with the business consulting company, and ongoing monthly expenses such as utilities, insurance, food, clothing, auto maintenance, mortgage note, charitable contributions.  At the bottom of the spreadsheet are goals for how many clients I need paying at an average ticket price to cover the business consulting company expenses and also make a profit.  If I had more than one rental property, this section of the plan would include the number of tenants with average rent paid in to cover expenses and make a profit.

The spreadsheet is now on my computer and ends up being one page so I can carry it in my purse.  I use it as a tool to make decisions on how much to donate to others, how much should go to savings, how much is forecasted in each area, and then how much is discretionary for other things.  This helps me control spending and stay focused on the plan to increase cash within my own personal limits.  It includes my day job, pet projects, the rental property numbers, and a savings plan for the next “project”.

Sometimes it is hard to talk with others about money.  So there, I have told you at least part of my story.  I made it, lost it, and am re-building it.  Life is not all about money but I like to see progress in accomplishing my goals which are now written and revised when needed.  There are many people who are like me, trying to figure it out as we go, working hard to keep the pieces of the puzzle together.

Nita Black - Business Strategist

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