Interest rates have seen significant increases lately, yet, parallely, small businesses are experiencing a rise in sales. This upsurge in interest rates, instead of posing an obstacle, is paving way for economic evolution. The baton of company leadership is transitioning from baby boomers to technology-driven millennials, facilitating a new era of innovation in small businesses.
BizBuySell’s research credits this rise to a substantial transfer of wealth from older to younger generations. This transfer enables younger generations to invest in businesses earlier and enter the market with stronger purchasing power, subsequently leading to an increase in business acquisitions and marketplace dynamism. This trend of wealth transfer and its impacts are likely to continue.
Small business sales have also witnessed significant growth from pre-pandemic values, showing a 20% increase in earnings from sales in the second quarter as compared to the same period last year.
Millennial-driven growth in small businesses
Innovative strategies by small business owners, such as boosting online presence and offering flexible purchasing options, have attributed largely to this recovery.
Interestingly, older entrepreneurs, particularly over the age of 65, are two times more likely to start a business than millennials, despite common misconceptions. These seasoned entrepreneurs contribute heavily to job generation and hold a significant impact on the U.S. economy.
Monetary conditions, tax policies, advanced analytics, and globalization trends, among other factors, contribute to maintaining steady growth in business sales despite increased interest rates. Lower capital gain rates and high estate tax exemptions, along with the potential for new tax benefits, may make business acquisitions a lucrative investment, consequently leading to a surge in entrepreneurship.
Prime potential business owners lean towards millennials, with influencing factors like inflation, corporate job insecurity, and stock market volatility playing roles. Recent research points towards a change in entrepreneurial motivation, with increasing interest in gaining control over career paths and balancing work and life. The advent of the digital era has amplified this trend, equipping potential business owners to establish and grow their businesses with lower initial investments.
According to BizBuySell, approximately 70% of entrepreneurs report their small businesses as profitable verifying the viability of this rising interest in entrepreneurship despite the changing and challenging economic landscapes.
