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In almost all cases, the most value-enhancing course of action for the owner of a small business is to stay the course and not sell. Here's the math. Let us assume that you own a firm generating $7 million in revenue and are taking home $1.5 million in profit a year (around $1 million after tax). Let us further assume that you come to an agreement to sell your company at $7.5 million — all cash, no seller notes or deferred payments. This is a huge economic windfall. But if you were to invest the after-tax amount (around $6 million) in a mutual fund that you expected to return 10% a year (and that's a high estimate), you'd be making around $600k a year pre-tax and likely well under $450k a year after taxes. That's a lot less than you were making before when you owned your business. This should not come as a surprise. As the owner of a business, you are shouldering the burden of running an organization, monetizing your expertise, and taking on a considerable amount of risk. In selling your business, you are relieving yourself of the duties of an owner/operator and passing those responsibilities — along with the associated risk — to another party. This does not mean it's a bad idea to sell. There are many other good reasons to sell a business — de-risking, interest in other pursuits, retirement, health, and so on. Furthermore, there are ample opportunities to strike a middle ground by adding provisions to your deal such as rolling over some equity. If you are considering the sale of your business, you may be interested in some of the resources posted at And if I can be of assistance, please reach out to me at Thanks, and stay well!

  • Writer's pictureRobert Knauer

The U.S. Department of Labor releases monthly employment information, and these reports have received quite a bit of attention in recent months because of their tie-in to inflation. Investors and economists are aware that the Federal Reserve is closely monitoring these reports to get a sense for the impact of rate hikes on the real economy — slower labor growth suggests the increased likelihood of rate cuts. (The latest job data from November indicates that the United States added about 200,000 jobs and that unemployment is at 3.7%, but that is not the subject of this post.)

What many observers gloss over is the remarkable dynamism that these reports reveal about the U.S. economy. The roughly 200,000 jobs added in November represents a pretty small slice of the labor force. Multiply it by 12 to get the annualized figure, and it comes to just 1.4% of the total civilian labor force. But that number hides a high level of churn because it is the difference between two much larger numbers. During the month of November, about 2.6 million jobs were created, and about 2.4 million were lost, with the roughly 200,000 difference between those two numbers being the number of jobs created. The quarterly changes are illustrated in the below chart from the U.S. Bureau of Labor Statistics.

Consider what this is telling us about the economy. If our economy creates 2.6 million a month, that comes to over 30 million jobs per year, or 19% of the total labor force of about 168 million. At that rate, the total labor force takes just over give years to completely turn over.

Of course, many employees hold on to their jobs for much longer periods of time. These long-tenured employees are offset by those working in jobs in cyclical or declining industries as well as those with high rates of turnover, such as fast food and retail, some of which turn over more than 100% of their labor force every year.

This is the result of the U.S. having a dynamic labor force. Employers tend to react quickly to changing economic conditions as well as evolving requirements in the labor force. If the demand for paper manufacturing goes down, employers will reduce their staffs — quickly. And they will ramp up quickly in response to increasing demand, such as the recent uptick in demand for home services. The same is not true in Europe, where employees stay in their jobs for much longer, partially due to labor laws making it difficult to lay employees off. Of course, this also makes it much more difficult to be hired on to a job in Europe.

We have a ruthless job market that is not suited to everyone, particularly those who have difficulty transitioning to different industries. But it also keeps out economy highly adaptable to changing conditions and is one of the reasons for our continuing economic strength.

Additional Reading

  • Writer's pictureRobert Knauer

The American consumer is doing pretty well — or at least that was the case in from March to December 2022, when the Federal Reserve Board conducted its triennial Survey of Consumer Finances (SCF). The SCF surveyed about 6,500 households, and the results provide a comprehensive picture of the financial well-being of American households. This provides a meaningful insight into the broader economy because the United State is a consumer-driven economy, with some 70% of U.S. GDP is attributable to consumption.

The Health of the Consumer

The first insight from the most recent SCF is that the financial well-being of American households improved in 2022. Highlights of the 2022 SCF include:

  • Median family wealth increased by 8.3% to $121,700 in 2022. This was the largest one-year increase in median family wealth since 2005. The increase in wealth was driven by rising asset values, particularly stock prices.

  • The homeownership rate increased to 63.8% in 2022. This was the highest homeownership rate since 2008. The increase in homeownership was driven by low interest rates and rising home prices.

  • The percentage of families with student loan debt increased to 22.3% in 2022. The median student loan debt balance was $30,000.

  • The percentage of families with retirement savings increased to 70.3% in 2022. The median retirement savings balance was $75,200 for families with heads of household aged 55 to 64 and $259,200 for families with heads of household aged 65 and over.

Business Ownership

Another insight from the survey is that there is a strong correlation between business ownership and income (which, in turn, is aligned with net worth). As the below figure illustrates, among the top 10% of earners, nearly half own businesses. Because business owners, especially at the higher end, are more focused on building wealth than generating income, a similar figure comparing business ownership to net worth percentiles is likely to be even more stark.

Source: Aladangady, Aditya, Jesse Bricker, Andrew C. Chang, Sarena Goodman, Jacob Krimmel, Kevin B. Moore, Sarah Reber, Alice Henriques Volz, and Richard A. Windle (2023). Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances. Washington: Board of Governors of the Federal Reserve System, October,

Net Worth

The SCF also provides a benchmark against which individuals and households may measure their net worth. The below chart breaks down the median net worth for various percentiles, meaning that of the roughly 1,625 households with the lowest net worth, that middle household, 813 up from the bottom, has about $3,470 in net worth. In case you're curious, households in the 99th percentile have a net worth in excess of $13 million. Taking inflation into account, net worth is up significantly in all percentiles from the previous survey in 2019, which higher percentage increases in the lower net worth percentiles.


Net Worth

Below 25%

$ 3,470









Source: 2022 SCF

Further Information:

-U.S. Federal Reserve Survey of Consumer Finances

-Additional information on net worth percentiles

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