According to the research firm Barlow Research Associates, the average small business owner is 60 years old. And as the Barlow chart below shows (click to enlarge), almost 40% are aged 65 or older.
This raises an interesting question. How will older small business owners react to the pandemic? Will they continue operating their businesses, or will they shut them down?
Because so many owners are near or past the traditional age, what this cohort decides will likely have a major impact on the recovery.
We're hearing two things in our interviews and conversations with older small business owners on this topic.
The majority of older owners (about 60%) we've talked to are telling us they plan on continuing to operate their businesses (although many in this group are concerned they may have to close due to bankruptcy).
This group gave two reasons for this. Most said they simply don't want to retire or quit their business, so they plan to continue.
A smaller share said they don't have the financial resources to retire, so they planned on keeping - or at least trying to keep - their businesses going.
But a sizable minority, about 40%, said they are considering closing their businesses permanently.
This group gave 3 main reasons for this.
First, it's going to take a lot of time, effort and energy to rebuild their businesses. Given their age and circumstances, they don't want to take this on.
The second reason is many felt keeping their business going would require them to make additional financial investments in the business. Again, given their age and circumstances, they don't want to do this.
The third reason is more psychological. Many simply are saying "now is a good time to close".
By this, they mean several things. Closing due to the pandemic is seen less like a failure, which is important given the competitive nature of most small business owners.
Also, most owners have already gone through the trauma of laying off employees. This is something they don't want to do again.
And several told us they've held on too long already. So it's time.
Of course, many who choose to retire or leave their small business will try to sell them.
But according to Barlow, even in good times about 1/3rd of small businesses shut down completely when the owner retires. This percentage will no doubt be higher due to the pandemic.
And if a large share of older owners shut their businesses down, the negative impacts on the economy would be quite large in terms of lost jobs and economic output.
FYI: Barlow Research Associates is a great resource for those interested in small businesses. We've been following them for years and find them and their insightful research for years.
