Associated Press / news@whmi.com

Mary Rajasekhar had owned Olivet Book and Gift for 35 years when she decided last Christmas it was time to retire.

But, with her children spread out across the country and into their own careers, she had no heir apparent for the store selling Bibles and Christian books and gifts in downtown Alpena, Michigan. No one was knocking down her door to buy the place, and she didn’t want to wait for somebody else’s plans to come to fruition before she stepped down.

So she closed the store in the spring, and the building sits vacant still today, a “for lease” sign in the corner window where holiday displays had enchanted passersby for three-and-a-half decades before.

“It’s heartbreaking,” Rajasekhar said. “It’s gut-wrenching … but I know that God’s got a plan.”

Similar stories are playing out across Michigan and the country as proprietors age and many start eyeing retirement. Some call it the next “silver tsunami.”

In Michigan, about 23% of business owners are 65 or older, according to US Census Bureau data, and about 53% are at least 55. That’s up from about 18% who were 65 or older and about half who were at least 55 years old 10 years prior.

Meanwhile, the share of the youngest business owners, those up to their mid-30s, hasn’t budged in 10 years at about 5%.

Michigan is aging faster than most states, with nearly 1 in 5 residents 65 or older, dwindling the workforce and ballooning taxpayer costs to care for an aging population.

With at least half of businesses operating without a succession plan, many of the smallest businesses will end up closing when their owners retire, while middle-market businesses will likely be gobbled up by private equity, said Doug Lepisto, co-founder of Sleeping Giant Capital and a business professor at Western Michigan University. Control of those gobbled-up companies will move to places like Boston, New York and Chicago and away from places like Kalamazoo and Grand Rapids.

While Michigan still opens more businesses than it closes, the gap is narrowing, according to US Bureau of Labor Statistics data. Between the first quarter of 1994 and the first quarter of 2024, the number of openings grew about 31% in Michigan, while the number of closures grew about 45%.

Those closures and consolidations leave gaps in communities where those businesses sponsored youth baseball teams, participated in the chamber of commerce and the local Rotary Club and raised funds for community needs.

Lepisto prefers the term “silver tide.” While tsunamis are sudden and violent, tides are expected and unnoticed, “but they change the shoreline,” Lepisto said.

“There hasn’t been enough conversation starting about this,” he said.

‘Going to other places’
Small businesses open and close every day by the thousands, and innumerable factors both micro and macro affect those decisions, from the personal lives of proprietors to the state and federal tax structures and regulatory frameworks affecting the business to inflationary pressures affecting their bottom lines.

But it appears from the data that age could play a role.

Michigan has added nearly 8,500 businesses and nearly $45 billion in inflation-adjusted payroll over the last 30 years, according to US Census Bureau data, but that growth hasn’t been even across the state. Forty-seven of the state’s 83 counties have had a net loss in the number of businesses over the last 30 years, and the median ages in those counties average about two years older than the counties that gained businesses.

Lepisto said the impact of the “silver tide” on communities will depend on their composition of businesses. Communities with a lot of mom-and-pop shops will probably lose those and residents will have to shop at franchise restaurants and grocery stores.

“Communities are going to lose a bit of their flair,” he said. “It’s not great, but it’s not really changing the fabric of the place.”

Communities made up of lower-middle market businesses will see more impact as those businesses get bought out by larger businesses or private equity. Those lower-middle market businesses tend to donate more to community causes and their leaders serve on community boards, all of which could be lost if out-of-state interests buy them up.

“That story of control, decision-making going to other places is, I think, the real story that nobody really talks about,” Lepisto said. “It raises the question of how do you change the trajectory.”

Lepisto’s Sleeping Giant Capital works to bring in investors to strengthen those lower-middle market businesses so control might stay local when their owners step away, and he said saving community investment will depend on such efforts.

Marc Rehmann will take over the family business from his parents, Nancy and Rob Rehmann, at Ed Rehmann.

Most business owners don’t develop succession plans because they’re too wrapped up in running their business to think that far ahead, said Jim McLain, Growth Team manager at the state-supported Small Business Development Center at Grand Valley State University, which works with close to 9,000 businesses a year on everything from setup to succession planning.

McLain said proprietors really should start thinking about how to get out of their business as soon as they start thinking about getting in.

Most of the businesses with which the SBDC works end up selling, McLain said, and his agency works hard to develop sales that keep businesses and their jobs in-state.

That doesn’t always happen. McLain said recently that he’d just worked with a small manufacturer that sold to an outfit that decided to move the manufacturing out of Michigan.

That original owner?

“He was crushed,” McLain said. “Just crushed.”

‘Probably would have just liquidated’
But sometimes it works out.

The banner on the Ed Rehmann and Sons website says “long live local” and “where hard work meets hometown.”

The Chesaning clothing store specializing in Carhartt gear has been in the Rehmann family since 1919, when Rob Rehmann’s grandfather, an immigrant tailor, bought it after working there a number of years. They still use the same sewing machine on which the first Rehmann made alterations.

In all those years, the store has given back to the community. Most recently, the Rehmanns partnered with Carhartt to host a student art contest for a mural on the side of the store. The winning eighth-grader got $500 worth of Carhartt swag, and the Rehmanns put the mural on a T-shirt they sold to raise $5,000 for the school district’s arts and music programs.

“We’re one of the anchors” of the community, Rob Rehmann said.

“We’re proud of that,” said his wife, Nancy.

Yet as Rob Rehmann’s brother, Ric, largely stepped away from the business and Rob and Nancy Rehmann neared retirement, “we would lay in bed at night and say, ‘What are we going to do?’” Nancy Rehmann said. “You know, we’re pushing 70 and we’re busy. And we said, ‘We just can’t lock these doors,’ you know?”

Then, about 10 years ago, Rob and Nancy Rehmann’s son, Marc — whom Nancy had fired from the store years ago when the then-15-year-old slept in on a Black Friday — approached his parents and said he wanted to take over the family business.

If that hadn’t happened, “I think we probably would’ve just liquidated,” Rob Rehmann said.

Today, Marc Rehmann is helping his parents modernize the store — no more writing out receipts by hand — and continuing the legacy of community service.

That mural? His idea.

“We’re just, you know, you can go to sleep at night and sleep,” Nancy Rehmann said.