Boom or Bust?

"There must be money in my account . . . I still have checks left!" This may sound like a line from a comic strip, but for many of the younger boomers, born 1956 to 1964, it's close to the truth. Big houses bought with so little money down that mortgage payments take up one-third of their income . . . credit cards charged to the limit . . . lease payments on the BMW . . . and don't forget that golf club membership.

"This group is aggressively climbing the ladder of life and hasn't yet reached its peak earning years," says Matt Oechsli, president of The Oechsli Institute, a sales consulting firm in Greensboro, North Carolina. According to Oechsli, the main focus of younger boomers is maintaining their current lifestyles. For those who have children or are thinking about starting a family, this includes the additional challenge of getting the kids through college without lowering their own standards of living. Retirement planning and balancing career and family round out these boomers' main concerns.

Enter the Woodstock generation. If you were born in the earlier years of the baby boom, 1946 to 1955, you may have traded in your tie-dyed T-shirts for a suit long ago, and you've probably already heard the savings wake-up call. Though maintaining their current lifestyles is still important for older boomers, it ranks behind educating children and their primary goal: saving for retirement.

The Entreboomers

Combine the boomer mentality with an entrepreneurial one, and the situation becomes still more drastic. Life is different for entrepreneurs, whether they're baby boomers or not. "Often, an entrepreneur's entire net worth is tied up in the business," says Derek Sasveld, a consultant at Chicago financial consulting firm Ibbotson Associates.

Though they have many of the same needs as other boomers, for "entreboomers," maintaining their lifestyle and saving for retirement pale against more pressing concerns. Sasveld finds these entrepreneurs have three additional money worries: maintaining ready liquidity, losing the value of their businesses, and hanging their future financial plans on the sale or success of their businesses.

One of the toughest aspects of business on any scale is cash management. Most entreboomers invest heavily in their firms, reasoning, "Here's a business I know, so here's where I can make the greatest profit." What they don't see is the potential for problems.

Problems arise when there is a sudden need for liquidity. Often cash can't be had easily or cheaply, forcing tough business decisions. Cindy Griffin, financial center manager at BB&T Bank in Charlotte, North Carolina, agrees: "Before you get into a bind, develop a banking relationship. Let the banker in on your developments, dreams, problems and progress, and provide updated business plans. That way, he or she will become a stronger ally, more ready to go to the mat for you."

This article was originally published in the February 1996 print edition of Entrepreneur with the headline: Boom or Bust?.