{"id":83,"date":"2018-09-28T16:08:31","date_gmt":"2018-09-28T16:08:31","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/suny-osintrobus\/?post_type=chapter&p=83"},"modified":"2018-09-28T16:10:34","modified_gmt":"2018-09-28T16:10:34","slug":"trends-in-business-ownership","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-herkimer-osintrobus\/chapter\/trends-in-business-ownership\/","title":{"raw":"Trends in Business Ownership","rendered":"Trends in Business Ownership"},"content":{"raw":"
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  1. What current trends will affect the business organizations of the future?<\/li>\r\n<\/ol>\r\n

    As we learned earlier, an awareness of trends in the business environment is critical to business success. Many social, demographic, and economic factors affect how businesses organize. When reviewing options for starting or organizing a business or choosing a career path, consider the following trends.<\/p>\r\n\r\n

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    \u201cBaby Boomers\u201d and \u201cMillennials\u201d Drive Franchise Trends<\/h3>\r\n

    We all hear and read a great deal about the \u201cgraying of America,\u201d which refers to the \u201cbaby boomer\u201d generation heading toward retirement age. This unprecedented demographic phenomenon\u2014in 2006 the first of 78 million members of the baby boomer generation turned 60\u2014is driving the ongoing battle to stay young, slim, and healthy. Every day, 10,000 boomers are turning 65, and the trend is likely to continue until 2030. Boomers have transformed every life stage they\u2019ve touched so far, and their demographic weight means that business opportunities are created wherever they go.<\/p>\r\n

    With their interest in staying fit, Boomers are contributing to the growth of fitness and weight-loss franchises. In just the past year, this category in Entrepreneur\u2019s<\/em> Franchise 500 has grown to over 50 franchisors. And according to the IHRSA, 52.9 million Americans belong to a health club\u2014up from 39.4 million 10 years ago\u2014so there are plenty of consumers feeding this growing trend.[footnote]\u201cPersonal-Care Businesses Franchises,\u201d Entrepreneur, www.entrepreneur.com, accessed August 6, 2017; \u201cIHRSA\u2014Consumer Research,\u201d IHRSA \u2013 Home, 2017, accessed August 6, 2017; Jeanette Borzo, \u201cFollow the Money: More Businesses Are Starting to Cater to an Affluent\u2014and Discriminating\u2014\u2019Mature Market\u2019,\u201d Wall Street Journal, September 26, 2005. p. R9; and Sara Wilson, \u201cAll the \u2018Rage,\u2019 \u201d Entrepreneur, January 2005, http:\/\/www.entrepreneur.com.[\/footnote]<\/p>\r\n

    Another area of boomer-driven franchise growth is eldercare. Founded in 1994, Home Instead Senior Care<\/span> is recognized as one of the world\u2019s fastest growing franchise companies in the eldercare market, with a network of over 1,000 independently owned and operated franchises in 12 countries. And as the world\u2019s population continues to age, the need for its unique services will continue to increase.<\/p>\r\n

    Home Instead Senior Care<\/span> provides a meaningful solution for the elderly who prefer to remain at home. Compared with the annual cost for a nursing home placement ($72,000\u2013$92,000), home care at around $45,000\u2013$60,000 a year is somewhat more affordable. Elder quality of life is enhanced by Home Instead Senior Care<\/span>\u2019s part-time, full-time, and around-the-clock services, designed for people who are capable of managing their physical needs but require some assistance and supervision. Home Instead Senior Care provides meal preparation, companionship, light housekeeping, medication reminders, incidental transportation, and errands. These services make it possible for the elderly to remain in the familiar comfort of their own homes for a longer period of time.[footnote]Home Instead corporate website, http:\/\/www.homeinstead.com, accessed August 17, 2017; \"Cost Analysis,\" Care Advantage, 2017 (August 17, 2017)[\/footnote]<\/p>\r\n

    But the best deal yet may be adult day services, one of the fastest-growing franchises and \u201cstill one of the best-kept secrets around\u201d according to Entrepreneur<\/span><\/em> magazine. Based on the concept of day care services for children, Sarah Adult Day Services<\/span>, Inc. offers a franchising opportunity that meets the two criteria for a successful and socially responsible business: a booming demographic market with great potential for growth, and excellent elder care. Programs such as SarahCare centers are highly affordable for its clients, costing around $17,900 a year. The SarahCare franchise allows entrepreneurs to become part of an expanding industry while restoring a sense of dignity and vibrancy to the lives of older adults.[footnote]\u201cCost Comparisons,\u201d http:\/\/sarahcare.com, accessed August 17, 2017; \u201cSarah Adult Day Services,\u201d Franchise Zone, http:\/\/www.entrepreneur.com\/franzone\/ (May 31, 2006).[\/footnote]<\/p>\r\n

    Millennials\u2014individuals born between 1980 and 2000\u2014are the largest living generation in the United States, according to Pew Research<\/span>. Millennials spend more money in restaurants per capita than any previous generation. They have been recognized as changing the restaurant scene by looking for brands that offer customized food choices, quality ingredients, freshness, authenticity, transparency, and environmental and social responsibility. According to the U.S. Chamber of Commerce<\/span> Foundation\u2019s report, two out of three millennials are interested in entrepreneurship. According to Forbes<\/span><\/em> magazine, 72 percent of millennials would like to be their own boss, 74 percent want flexible work schedules, and 88 percent want \u201cwork\u2013life integration.\u201d When it comes to owning a franchise, growth potential and meeting a flexible, fulfilling lifestyle are both something that attracts Millennials. A survey by the CT Corporation<\/span> found that 60 percent of college graduates wanted to start a business after graduation, 67 percent lacked the know-how, 45 percent didn\u2019t think they could come up with a name, and 30 percent were not knowledgeable about how to market the business. Franchising is the perfect solution to these issues. For example, Chicago area native and millennial Sal Rehman grew up working in his family\u2019s diner. Sal had a dream of operating his own restaurant, and he decided to take the franchising path. In 2015, at the age of 27, Sal opened his first Wing Zone<\/span> store in suburban Glendale Heights, Illinois. He currently owns five Wing Zone<\/span>s.[footnote]Judy Kneiszel, \u201cMillennials\u2019 Next Frontier: Franchising,\u201d QSR, http:\/\/www.qsr.com, accessed March 31, 2018); Danny Rivera, \u201cThe Impact of Millennials on the Franchise Industry,\u201d International Franchise Association, https:\/\/www.franchise.org, accessed March 31, 2018.[\/footnote]<\/p>\r\n\r\n<\/div>\r\n

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    Boomers Rewrite the Rules of Retirement<\/h3>\r\nAt age 64, Bob Drucker could be the poster child for retirement except that the concept makes him recoil. Drucker is living his dream. He and his wife have a large house on Long Island where Drucker kicks back by floating in his pool when he\u2019s not spoiling his granddaughters with trips to Disneyland<\/span>.\r\n\r\n\u201cThe only way you can get me out of here is to carry me out,\u201d Drucker says, referring to RxUSA<\/span>, the online pharmacy he founded and runs in Port Washington, New York. \u201cI love my work, and I cannot imagine sitting home and doing nothing.\u201d\r\n

    Drucker is not alone. Today\u2019s boomers are working longer at their jobs and embracing postretirement second careers, which often means starting their own small business.[footnote]Stephanie Clifford, \u201cWhat You Need To Know Now,\u201d Inc. Magazine, September 2005, p. 27.[\/footnote] As retirees opt to go into business for themselves, they are choosing different forms of business organizations depending on their needs and goals. Some may start small consulting businesses using the simple sole proprietorship form of business organization, while couples or friends might choose to become partners in a retail or franchise venture.<\/p>\r\n

    The more healthy and energetic the baby boomer generation remains, the more interested it is in staying active and engaged\u2014and that may mean postponing retirement or not retiring at all. The annual retirement survey by Transamerica Center for Retirement Studies found that as this record number of Americans approaches retirement age, many are not slowing down. In fact, 51 percent of boomers plan to work in some capacity during their retirement years, and 82 percent indicated that they will not retire at or before age 65.[footnote]Laura Shin, \u201cWhy the New Retirement Involves Working Past 65,\u201d Forbes, https:\/\/www.forbes.com, accessed August 17, 2017.[\/footnote]<\/p>\r\n\r\n<\/div>\r\n

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    Mergers and Foreign Investment Boom, Too<\/h3>\r\n

    After shunning big deals for more than three years, corporate America has launched a new merger wave. In 2016, North American companies announced deals totaling almost $2.0 trillion. Many of these deals were large ones, with the largest deal, announced in 2016, AT&T<\/span>\u2019s merger with Time Warner<\/span> for over $85 billion. In addition, foreign merger activity has reached a new high. Worldwide deal volume in 2015 was 44,000 transactions totaling $4.5 trillion. In 2016, the number of transactions increased to over 48,000, one of the most active periods of merger activity to date. Non-U.S. companies accounted for about two-thirds of the transactions. European companies\u2019 cross-border transactions led the way, with deals totaling more than one trillion dollars. The increase is the result of improving economic growth and better stock prices.[footnote]\u201cM&A Statistics,\u201d Institute for Mergers, Acquisitions, and Alliances, https:\/\/imaa-institute.org, accessed August 17, 2017.[\/footnote]<\/p>\r\nThis current boom in mergers feels different from earlier merger mania, however. New players are entering the arena, and the number of U.S. and foreign companies making cross-border acquisitions has increased. Whether these new mergers will be good for the global economy remains to be seen. Transactions that lead to cost savings, streamlined operations, and more funding for research and capital investment in new facilities will have positive effects on profitability. Many deals, however, may fail to live up to the acquirers\u2019 expectations.\r\n

    Foreign investment in U.S. companies has also increased dramatically. Annual foreign direct investment reached $373.4 billion in 2016.[footnote]\u201cExpenditures by Foreign Direct Investors for New Investment in the United States, 2014\u20132016,\u201d Bureau of Economic Analysis, July 12, 2017.[\/footnote] The jump is the result of a worldwide boom in mergers and acquisitions and the need to finance America\u2019s growing trade deficit, as well as the continued attraction of the U.S. economy to investors worldwide.<\/p>\r\nAnd what about American investment in foreign economies? It is skyrocketing as U.S. businesses seek out opportunities in developing countries. According to the Congressional Research Service Report<\/span>s, the outflows from the United States into foreign countries now exceeds $6.4 trillion a year.[footnote]James K. Jackson, \u201cU.S. Direct Investment Abroad: Trends and Current Issues,\u201d Congressional Research Services Report, https:\/\/fas.org, accessed August 17, 2017.[\/footnote] In addition to the attraction of cheap labor and resources, U.S. companies of all sizes continue to tap the intellectual capital of developing economies such as China and India, outsourcing such functions as payroll, information technology (IT), web\/email hosting, customer relationship management (CRM), and human resources (HR) to keep costs under control and enhance profitability.\r\n

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    Concept check<\/h3>\r\n
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    1. What are some of the demographic trends currently impacting American business?<\/li>\r\n \t
    2. As a prospective business owner, what could you do to capitalize on these trends?<\/li>\r\n \t
    3. What other economic trends are influencing today\u2019s business organizations?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n

      Summary of Learning Outcomes<\/h3>\r\n<\/div>\r\n<\/div>\r\n
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      1. What current trends will affect the business organizations of the future?<\/li>\r\n<\/ol>\r\n

        Americans are getting older but continue to open new businesses, from sole proprietorships to partnerships, corporations to franchise operations. The service sector is booming in efforts to meet the demand for fitness, health, and eldercare.<\/p>\r\n

        Other key trends include an escalation of worldwide foreign investment through the number of mergers taking place. All forms of business organization can benefit from outsourcing, tapping into the intellectual capital of developing countries.<\/p>\r\n\r\n<\/div>\r\n

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        Preparing for Tomorrow\u2019s Workplace Skills<\/h3>\r\n
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        1. \r\n

          Suppose you are considering two job offers for a computer programming position, one at a two-year-old consulting firm with 10 employees owned by a sole proprietor and one at a publicly traded software developer with sales of $500 million. In addition to comparing the specific job responsibilities, consider the following:<\/p>\r\n\r\n