Small business owners can impact small cities as they retire
BY SUSAN BRANNON
Newberg Graphic reporter
Nationally, roughly 10,000 Baby Boomers are turning 65 every day. Many do not own a small business, while some do and that could present new opportunities for more workers to get the chance to own a business and build wealth.
It is no secret that small businesses are the engine of the U.S. economy; they make up 64 percent of new jobs each year, according a report from the Institute for a Competitive Inner City (ICIC).
Newberg, St. Paul and Dundee have seen a few businesses expanding of late, some handed down or purchased from retiring Baby Boomers. Trellis Brewing Company in St. Paul is expanding to add a brewery owned by Austin Smith, grandson of the founder of the hop farm where the brewery resides. Founders of Duck Pond Winery in Dundee are handing over responsibility for running the business to their children. The mantle was also passed down at Chehalem Valley Orchard Equipment in Newberg to the owners' son-in-law, Zack Boeckman.
According to the California Association of Business Brokers, in the next 10 years as much as $10 trillion of small business wealth could be transferred to the next generation. It is estimated that 7 million businesses are owned by Baby Boomers – those born from 1946 to 1964. Many of those businesses are expected to go up for sale over the next five years.
The problem is that most small business owners do not have an exit plan, although as many as 54 percent intend to leave the business in the next 10 years. The advantage in Newberg/Dundee area is that the mantle is being passed down or sold to the Milennial generation, giving them an upper hand as the owner can stick around as an advisor.
"What we have seen with businesses that are now looking at transitioning, that are aging out and wanting to retire, is how they are approaching their transition," said Ron Wolfe, commercial relationship manager vice president at First Federal Savings and Loan in Newberg. "I would guess that it could be somewhere in that 50 percent range where their succession planning is handed down to that next generation to family. (It's) what we see a lot of. It also depends on the type of industry."
Wolfe gave an example: a retiring dentist recognizes the need to bring in a junior practitioner that learns the business and works with the client base so they can ease in as the dentist phases out.
"By and large here, people are positioned with a plan of how their transition plan is going to look like," Wolfe said. "Is it an employee that is in management that is well versed and trained that is younger and says, 'I want to take the next step; I've been here, worked with you,' and slide in ease into that role. Then how they do it as far as equity, interest and down payment and work with that to see how does that meet everybody's needs."
Another concern that Wolfe commented on is the fact that sometimes the owner may not have family members to hand a business over to, or the family member may not be interested. The owner can look into other options and may find that the business has not kept up with the industry through upgrades and technology. In this case, the cost may be too high to upgrade the equipment to sell the business.
"For the most part at the local landscape, we are dealing with people who have a key employee or family member to take that succession," Wolfe said.
Business in brief
Newberg Community Foundation accepting
applications for grants for charitable project
Newberg Community Foundation is accepting applications for non-political charitable projects in Yamhill County that serve Newberg, Dundee or St. Paul.
The deadline for applying is Oct. 1 for a maximum $2,500 grant.
For more than 20 years the foundation has distributed grants to in excess of 50 local organizations that directly benefit families and children of Newberg, Dundee or St. Paul.
For more information, call the Chehalem Valley Chamber of Commerce at 503-538-2014.