Aging and depopulation leave small businesses endangered

Japan is no stranger to depopulation: the country has experienced negative growth for decade and provides the rest of the world a glimpse of a possible future. From importing labor to technology, Japan has many lessons to teach about how to cope with a shrinking, aging population. But many of the effects are poorly understood or just now becoming apparent.

In some ways, Japan is better suited to adapt to depopulation than most other countries. With a strong economy and technology advanced society, Japan seems to be weathering the storm. But that economy may soon be under tremendous pressure. According the New York Times, the average age of owners of small to medium sized businesses is 62. And the majority of those business owners have no succession plans in place. Without a succession plan, many of those businesses will simply shut their doors, leaving employees out of work and towns and cities short of the services they need to survive. This is especially dire for rural locations as the best successors, young people, have moved to cities in search of better opportunities.

Rural America has been grappling with the same issues. When young people move to the cities and business owners retire, who is left to run the auto repair shop, the hair salon, the diner, and the plumber’s business? When residents can’t get their car repaired, their hair cut, a meal out, or a drain unplugged, they have no choice but to leave. Compounding the issue is rural communities suffer from a lack of quality healthcare services with chronic shortages of healthcare professionals and inadequate facilities. When aging business owners cannot get the health care they need they are forced to shut the business down and move just to get the care they need.

While Japan and real communities provide a glimpse of the future, the view does not adequately represent impact at scale. Japan has 125 million residents, rural America has roughly 60 million. What happens when countries like China (1.4 billion) have shrinking, aging populations? The effects will be much more profound when aging and depopulation happen at this much larger scale.