As part of the ritual of examining local commerce and SMB Saas strategies, Localogy goes right to the source: SMBs themselves. How do they feel about marketing and operational software? What features do they want? And how has their hunger changed during a global pandemic that has hit local businesses hardest?
Localogy’s upcoming Modern Commerce Monitor (MCM) wave 6.1 answers these and other questions across the SMB SaaS product set, which we preview in this Benchmark Bytes series. After the last installment examined SMBs’ cryptocurrency adoption, we switch gears this week to examine their retirement planning.
Starting at a high level, 62 percent of SMB owners over the age of 55 have thought about a retirement plan. Of those, 27 percent plan to close permanently, 22 percent plan to turn the business over to a family member, 23 percent plan to sell before retiring, and seven percent are unsure. These answers were given in Q4 2020.
What Does it All Mean?
Going a bit deeper, a few things jump out at us:
— It’s notable that the top answer given was to close the business altogether, rather than selling or passing the reigns in some way.
— This could indicate some generational differences that cause SMB owners’ next of kin to be uninterested in certain types of local services, versus “sexier” professions in corporate or tech environments.
— It’s likewise notable that only 22 percent of businesses plan to pass ownership to a family member. This would seem to be the most likely outcome but that’s not the case according to these data.
— Selling the business before retiring is also surprisingly low, given that many SMBs factor the sale of their business into their personal retirement savings plan. This is only true for 23 percent of SMB owners.
— Among those who do plan to sell, 21 percent will “modernize the business prior to selling. And the stated reason for this plan is to maximize the sale price.
— Beyond all of the above answers, it’s noteworthy that only 62 percent of businesses have even thought about their exit strategy upon retirement. It’s surprising that 38 percent of SMBs haven’t done this at all.
— Either way, education and awareness will be necessary, which could signal advantage for fintech players who can accommodate SMB business owners and help them better plan their business’s retirement.
Time to Shine
Stepping back, fintech, eCommerce and several areas of SMB adoption tracked by MCM continue to grow rapidly among SMBs. SMB SaaS startups are correspondingly thriving with exit velocity, funding, and public-market performance. SMB SaaS is becoming a leading subsector of the broader SaaS universe.
Meanwhile, new SMB SaaS users shown in these survey results could represent permanent adopters — a concept that’s accelerated in the Covid era as SMBs are forced to accelerate their digital transformation. This sends them into the arms of SaaS providers to accomplish a range of operational and marketing functions.
We’ll return in the next installment to go deeper on other pandemic-driven areas of SMB technology adoption. That will include top goals and what types of SMBs are adopting. Let us know what additional insights jump out at you from the above data, and stay tuned for more breakdowns in our Benchmark Bytes series.