Why You Should Be Buying Retirees' Businesses – The Facts and Figures

With the UK's ageing population and the increasing number of business owners reaching retirement age, there is a wealth of established businesses becoming available for acquisition. In this blog post, we will explore the facts and figures behind this lucrative opportunity and explain why buying retirees' businesses makes sense for ambitious entrepreneurs and SMEs.

1. High Number of Retirees

The UK population is growing older, with 18.5% of the population aged 65 years or older in 2021, and this number is projected to increase to 20.7% by 2031 (ONS, 2021). As a result, there is an influx of retirees, with approximately 1,000 people retiring every day in the UK (DWP, 2021). This demographic shift directly impacts the business landscape, as a significant number of SME owners are also approaching retirement age.

2. The Dominance of Older SME Owners

According to the Federation of Small Businesses (FSB, 2021), 62% of UK SME owners are aged 55 or over. With millions of SMEs operating in the country, this means that a substantial number of businesses will soon be looking for new ownership as their founders retire. This transition presents a prime opportunity for entrepreneurs and SMEs to acquire established businesses with solid foundations, experienced staff, and a loyal customer base.

3. The Value of Retiree-Owned Businesses

Retiree-owned businesses are often attractive acquisition targets because they typically have:

Established customer bases: Years of operation have allowed these businesses to develop strong relationships with their customers, ensuring stable revenue streams.

Robust operational processes: Retiree-owned businesses have had the time to refine their operations, resulting in efficient and streamlined processes.

Valuable intellectual property: Long-standing businesses are more likely to have developed unique products, services, or proprietary knowledge that can offer a competitive edge.

4. Growth Opportunities and Synergies

Acquiring retiree-owned SMEs can provide several key benefits, such as:

Access to new markets and customer segments: Acquiring an established business can help you quickly expand your reach and tap into new customer bases.

Expansion of product and service offerings: By acquiring a business with complementary products or services, you can diversify your offerings and increase revenue streams.

Consolidation of market share: The acquisition of a competitor can lead to increased market share and a stronger competitive position.

Operational efficiencies and cost savings: Combining resources and streamlining operations can result in cost savings and improved profitability.

Knowledge transfer and employee retention: Acquiring a retiree-owned business allows you to retain experienced staff, ensuring a smooth transition and continuity of operations.

5. The Financial Potential of Acquiring Retiree-Owned SMEs

The financial potential of acquiring retiree-owned SMEs lies not only in the individual value of the acquired businesses but also in the increased value and profitability of the group as a whole. By acquiring and consolidating multiple businesses, the group's overall value can increase due to the inherent value of larger, more diversified businesses. For example, one business making £2 million in revenue might be worth 3x annual profits, but two identical businesses, each making £2 million in revenue, operating within the same group, might be worth 4x annual profits. In addition to the value creation through acquisition, the group can further increase its profits by realising synergies from the acquired businesses. A small increase in revenue and decrease in cost of each business can result in a large increase in group profits.

Conclusion

The facts and figures demonstrate that acquiring retiree-owned businesses is a lucrative opportunity for entrepreneurs and SMEs seeking growth and expansion. With the UK's ageing population, the increasing number of retirements, and the dominance of older SME owners, there is an abundance of established businesses ripe for acquisition. By capitalising on this trend and leveraging the benefits and synergies that come with acquiring retiree-owned businesses, ambitious entrepreneurs can unlock significant growth potential, increase profitability, and secure long-term success in their respective industries.