By Ryan Cohen
Historically, starting a small business or taking over the family business was seen as a reliable path to financial stability.
However, over the past few decades there has been a notable decline in younger generations interested in owning a traditional business.
Millennials who grew up with the internet and the generations that followed seem to have this misconception that to be a successful entrepreneur they need to start something that will disrupt an entire industry.
They’re overlooking the opportunity of ‘boring businesses’.
Every neighbourhood needs a pharmacy, a pet store, a grocery store, plumbing services, the list goes on.
While these might not be deemed cutting edge, they are essential, and very often highly successful.
These traditional business models have consistently demonstrated their resilience over time. Unlike startups, which often face higher risks due to market volatility, these established businesses tend to be more stable.
They also generally require less capital to acquire from a current owner than starting one from scratch.
Perhaps most importantly, the existing customer base of these businesses allows new owners to hit the ground running, bypassing the need to search for a market for their products or services.
Boring businesses make business sense, and with boomers reaching retirement age and looking to sell off their businesses, there is great opportunity on the horizon. In Australia over one million business owners will retire in the next 10 years.
A ‘silver tsunami’ is hitting rural America with small businesses closing doors without replacements. In South Africa, these figures are much harder to find, but what we do know is that there are approximately only 1 million formal SMEs servicing a population of 63 million people.
SMEs are good for the economy, making up around 34% of South Africa’s GDP. They’re also job creators, employing 60% of the labour force.
By growing and supporting these mundane businesses, South Africa and its people could be in a far more favourable place.
There is opportunity out there – we need to stop looking at the Elon Musk’s of the world and shift focus to driving greater attention (and excitement) to the unassuming, everyday businesses that keep the world running.
Like Abed Tau said so well in his book Searching Through Dustbins: Boring is good, stay away from exciting if you want to be rich. Boring business have low barriers to entry and a high chance of success. If you want to become a billionaire pick a difficult business model with high barriers to entry that’s resource intensive - all for a less than 1% chance of success. But if you succeed you will be one of the 3000 billionaires in the world.
Stay tuned for my next article where I unpack the potential and benefits of buying an existing, boring business.
BUSINESS REPORT