Understanding the fresh attitudes of millennial business owners
When you hear the discussions about business owners transitioning out of their business, what do you picture? You likely see someone who is older, someone who 60-ish rather than in the 40s or even younger. It’s safe to bet that you didn’t picture the two early-30-somethings who were sitting across the table from me last week. We were there to talk through and model different scenarios that might allow the two young owners to “retire” at age 45. What would that look like? What are good assumptions about the business and potential exit strategies? Could it work?
At the end, it struck me that this conversation was very different than most of my discussions with owners about their exit. Usually the owner is closer to retirement age. He or she may or may not have struck a balance between paying him or herself adequate compensation versus keeping all the capital in the business. Most haven’t thought about or taken steps to diversify their portfolio. The business is at least 75% of their holdings. Their transition plans are vague at best.
The couple I met with last week, however, was different. They were paying themselves reasonable compensation, wanted to diversify their portfolio, and de-risk. They want to plan and strategize their exit starting now. Quite the contrast.
You can hardly catch up on your daily reading without stumbling over articles and blog posts about the generational differences in the workplace. Perspectives vary on what is good and bad about each generation in the workplace, their attitudes toward work, as well as attitudes about money. The discussions focus on the differences between each generation.
What is interesting in comparing the typical experience with meeting with the business owners is that boomers and millennials actually share many similarities. They are optimistic and hopeful, determined and driven, and favor leadership styles that bring people together toward consensus and the same goal.
Where the two generations part paths are in their attitudes toward money. For the boomer generation, money symbolizes status, freedom, and flexibility. Boomers as a group were driven to work insane hours to accumulate as much wealth as they could. For many millennials, money is the payoff for the work done. Money is important, but it is far more important for them have to balance in their lives. Upward mobility and wealth for the sake of wealth is not a part of their aspirations. They nurture their identity in a way that is more independent of their career or, in the case of a business owner, their company. On the other side, the business often is the boomer’s identity.
Regardless of which end of the spectrum an owner is on, all owners share the same reality that at some point their ownership will end. What shouldn’t be surprising — but still is — is that millennials are already approaching transitions differently than boomers. As groups, millennials and boomers are achievers. Boomers tend to own their companies for much of their professional lifetimes. Millennials are motivated by what comes next and have high expectations. If life is meeting those expectations, impatience adds to the millennials’ fuel for finding the next adventure. As a result, I believe that millennials will be the consummate serial entrepreneurs.
One other difference struck me in this and other meetings with younger owners. These two owners are remarkably clear-eyed about where their strengths and competencies did and did not exist. They also knew, intuitively, that for the business to grow its profits and value at the same time, they needed to reach out and bring a team together to make it happen. That is not a trait boomers are known for. They were often told (and said themselves), “If you want something done right, do it yourself.” When it comes to building value in a company, the millennials’ approach has greater probability for creating and growing sustainable businesses and real economic value.
As always, each generation can learn from one another’s successes and failures. From all the reports, millennials have a strong desire to leave the world better than they found it and still have time left to do other things they enjoy as well. Based on my meeting last week, I think they’ll do just that.
On a different note, as a business owner, have you ever been curious as to how you stack up to other owners in terms of your readiness for transition?
As president of the Wisconsin Chapter of the Exit Planning Institute, I’m excited to share with you that we have just launched a survey of Wisconsin business owners to learn just that. We want to learn, and will ultimately share with you, how ready our Wisconsin business owners are. How ready are you?
Follow this link to take the Owner Readiness Survey now. It should take less than 15 minutes to complete. Let me know what you think and if you want to be included on the distribution of the results later this year.
Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.