'It's an American tragedy' when small businesses close up shop

Small businesses employ about 62.3 million people in the U.S., representing about 45.9% of all private-sector employees in the country.

When business owner Weld Ransom sold his architectural-design firm, PlanForce, to Teamshares Inc.$(TMS)$ in February 2020, he got a payout and kept the Minnesota business running under its new owner.

Ransom, who was 66 at the time of the deal, said he had already accepted that his three sons had chosen different career paths and had no interest in his business. He wasn't going to pass it down to an heir and keep it in the family.

"The reason I wanted to sell is that I felt I was not the best person to carry the company into the 21st century," said Ransom, who added he has no regrets about the deal.

"It's important to get out of the way of the business. Stop being the owner. Get out of their hair and find something else to do," said Ransom, who volunteers with the U.S. Small Business Administration's SCORE program as a mentor to keep his hand in the business community.

Ransom's employees got PlanForce shares, becoming stakeholders in the company. PlanForce joined Teamshares, a publicly traded buyer of small- and medium-sized businesses.

Small businesses employ about 62.3 million people in the U.S., representing about 45.9% of private-sector employees in the country, according to the U.S. Small Business Administration. Of the 6 million small businesses in the U.S. with up to 100 employees - 4.5 million of which are owned by baby boomers or Generation X, Teamshares said.

Ransom felt lucky to sell his business since the vast majority - 70% - of businesses fail to find a buyer, according to Teamshares. Baby boomers are those born between 1946 and 1964. Gen X is those born between 1965 and 1980.

"Many aging owners of businesses across our country don't have a succession plan. Many times, they close and shut down and disappear. Keeping those businesses going - we can recognize their value and capitalize on what they represent - that's important," Ransom said.

As baby boomers and the oldest Gen Xers near retirement, they face the reality of having undersaved, while others are living longer and grappling with higher costs on everything from housing to healthcare to groceries and gas. Business owners have an extra burden: supporting themselves and taking care of their employees.

About 40% to 50% of small-business owners expect to retire within the next decade, Jegoo Lee, associate professor of management at the University of Rhode Island's College of Business, said.

"It's not just a transition crisis. It's a loss to the economy, to jobs, to decades of institutional knowledge when a business simply turns off the lights. It's a huge tragedy for the local economy," Lee said.

"Most of the time, founders run the business until they can't work anymore. Less than 10% are thinking about succession planning," Lee said. "This silver tsunami of business retirements means the local economy, the local community lose these economic engines."

"It used to be that businesses stayed in the family. But family succession went from the default to extremely rare," said Teamshares Chief Executive Michael Brown.

Teamshares, founded in 2019, has acquired more than 90 small companies, specializing in deals in which the founder is retiring. The average age of the businesses they've acquired is 37. The goal is to buy thousands of companies and act as a holding company for those many small businesses.

Teamshares sees 75,000 businesses a year that are actively for sale, but only 15,000 of those meet its minimum size criteria of having between $500,000 to $5 million in operating profit. It then makes buying selections from that group. Teamshares pays four to six times operating profits, depending on the business.

Brown said the business owners want to see their legacy continue in new hands. "There's a current of emotion that runs through the process. It's their baby," Brown said.

Without successful exits, $5 trillion in generational wealth is on the line, according to Erik Salazar, co-founder and CEO of Iconic, a mergers and acquisitions firm specializing in small and mid-sized businesses. That wealth could be passed on to family members or the next generation of small-business owners looking to pave their own paths.

Many small-business owners have poured their life's work and wealth into their businesses, Salazar said. Selling their business is how the small-business owner will survive in retirement.

"When an exit fails, it's not just a small business closing. It's a business owner's retirement plan evaporating," Salazar said.

Salazar was inspired to build Iconic, in part, after seeing his own father close his travel agency without selling it when he got sick because he didn't realize there was value in the business he created.

The tools that help a smaller business find a buyer more easily include having clean financials that haven't been intermingled with personal finances, knowing a realistic valuation for your business, and having a business that will survive without the owner, Salazar said.

"Half of the U.S. GDP is sitting inside these small businesses. The repercussions to the communities when these businesses close is big - to the employees, to the communities. It's an American tragedy when these businesses don't transfer to the next generation of entrepreneurs," Salazar said.

Catherine Wygant Fossett, executive director of the Institute for Family-Owned Business, said founders need to consider succession when they start their business and not wait until they're ready to retire.

"People don't think about succession. You really need to plan ahead," Wygant Fossett said. "If nobody takes them over, they just disappear."

-Jessica Hall

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July 10, 2026 11:08 ET (15:08 GMT)

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