Tectonic Shift: Getting Old
We’re heading for a business earthquake that’s going to shake up the entrepreneurial world. The tectonic plates of business are shifting under our feet and it’s a big deal. Just like any tectonic shift, we’ll see quakes and tsunamis and volcanoes. Unlike the environmental shifts however, the business world is lucky – we have the ability to see this stuff coming. All we need to do is watch, listen and respond.
I happen to know a lot of people who work in construction. Some are entrepreneurial, some are employees, and some are contractors who rely on the other two groups to get them through. Right now, all of them are busy. Up the walls, 16 hour days busy. When I speak to some of them about the projects they’re working on, I’m noticing that a lot of them – about 40% – talk to me about their projects being in the area of nursing homes or retirement villages. It’s odd. Ten years ago when construction was booming, there was a similar trend which pointed to an investment in infrastructure, with my mates all working on road or civils projects such as pipe laying or government buildings.
Noticing also that some of my business associates have begun to invest in retirement villages instead of starting up micro-businesses, I couldn’t help but wonder – is this trend indicative of a demographic wave of change heading our way?
Let’s look at the statistics. In America, 10,000 baby boomers are retiring every day. A baby boomer is defined as a person born between the years of 1946-1964. This mass shift in this demographic affects our economy in several ways. For starters, it puts pressure on major systems like healthcare, housing and insurance. In America, the government has already had to start shifting resources in anticipation of the exploding healthcare costs ahead of them and it won’t be long before other governments globally need to do the same thing.
If we look deeper at the information given to us by our census reports, the facts speak for themselves. The numbers of people turning 70 is growing daily and is set to increase steadily for the next twenty years. This is not a demographic change, this is a demographic inevitability. To put this in perspective: in America alone, the number of 70-year olds is set to grow by 85% by 2030!
When looking at these statistics, the uplift in planning applications for nursing homes, and droves of workers going off to finish retirement villages isn’t so surprising. This trend is happening all around the world.
But aside from caring for the elderly, what does this mean for business?
Because the baby boomers enjoyed the good times and survived two recessions, they’ve got cash, and have accumulated assets. They own property, stocks and shares, have a number of illiquid assets under their belts. They’ve been behind the driving force behind the major economic trends over the last few decades. They’ve been the biggest generation so far and they’re pretty comfortable: for now.
However, they’ve also bred the next generation which is even bigger – the Millennials. As we talked about in our Cow/Milk post, Millennials think in an entirely different way. Where Baby Boomers wanted to grow up, settle down, own a house and have babies, Millennials want to do the exact opposite and be like Peter Pan – young forever.
Millennials don’t have all cash because the Boomers are sitting on it. The assets around the world – property, shares, businesses – are owned by Boomers as they have been for the last few decades. And this is fine with the Millennials because not only do they not have the buying power to snap up houses and stocks so it doesn’t matter anyway, but they really don’t care about that stuff! They’re busy perma-travelling, swiping right and living it up in the gig economy. Their goals and dreams are different.
The trouble is, the Baby Boomers are already spending more than they would like just to maintain their lifestyle. So they’re going to start looking around their lives and try to get rid of the things that are no longer important to them, like the houses, diminishing assets, stocks. They’ll want and expect the Millennials to buy them, but they’ll be whistling to the wind because the buyers won’t be there to greet the sellers.
We’ve entered an era where people will outlive their savings. In that same world, we’ve got a problem that the younger generation can’t afford to save, to provide an upward flow of liquid assets to maintain the older generation. It’s going to cause massive downward pressure on a platform that will eventually crack.
This is a problem for business because it spells a big market shift in terms of how we think, behave and spend money. If your business is to survive, the key to survival is to be prepared to modify your business model to withstand this economic earthquake.
What you’re doing now might not be what you’re doing in five years time so you’ll need to be able to flex your entrepreneurial muscle and continue to deliver value to your market but just in a different way. It’s not going to be enough that you have a shop. You need to pay attention to the technological, financial shifts which will either make or break your business and ultimately, the differential is you.