As business owners, we spend years, even decades, pouring our time, energy, and resources into growing a company. We focus on expansion, profitability, and long-term success. But what if success isn’t dictated by how well we grow, but by how well we prepare for the unexpected? That’s where the 5 D’s come in—five life-altering events that can force a business owner into an unplanned and often devastating exit.
Nearly 50% of businesses that close do so involuntarily. That means half of all business owners fail to put a plan in place for the inevitable “what ifs.” Are you one of them? If you believe these things only happen to others, let me tell you—they don’t. They happen to everyone, and the difference between surviving and losing everything is preparation.
The 5 D’s that kill businesses are:
- Divorce
- Disagreement
- Disability
- Distress
- Death
Each of these is a potential minefield. If you don’t pay attention before they happen, you may never recover. Let’s break them down and see why they’re so dangerous—and how you can mitigate the risks.
Divorce: A Business Minefield
Half of all marriages in the U.S. end in divorce. For those of us who are business owners, that’s not just a personal crisis—it’s a business catastrophe. Many couples go into business together, never anticipating a split. But when things go south, dividing a business is just as complex as dividing assets in a marriage. Who owns what? Who cashes out whom? How do you ensure the business survives when emotions are high and decisions are fueled by revenge rather than reason?
I’ve seen high-level executives lose everything because of poorly handled divorces. I’ve seen business owners get trapped in toxic partnerships with their ex-spouses, unable to move forward. And I’ve seen success stories—where couples made the tough but smart decision to protect their business before problems arose.
Lesson: If you’re in business with your spouse, plan for the worst-case scenario. A well-structured operating agreement, a prenup, or a business succession plan can save you from devastation down the road.
Disagreement: When Business Partners Turn into Enemies
A business partnership is like a marriage—when it works, it’s powerful. But when it falls apart, it’s a nightmare. I’ve worked with business owners who trusted the wrong people, ended up in bitter disputes, and found themselves stuck in legal battles that drained their resources and their sanity.
Take my publisher, for example. She entered a partnership with someone who had different business goals, different values, and, ultimately, different ethics. The result? A contentious battle that nearly destroyed her publishing company. She escaped with only a fraction of what she had built, but she learned a valuable lesson—always have an exit strategy in place before you need one.
Lesson: If you have a business partner, make sure you have a clear, legally binding agreement that outlines what happens in case of a split. And read the fine print—don’t sign anything you don’t fully understand.
Disability: When the Owner Can’t Work
What happens when the business owner becomes incapacitated? Whether it’s a car accident, a stroke, or a long-term illness, disability can be just as damaging as death. I’ve seen businesses crumble because the owner never put a plan in place to transition leadership in case of incapacity.
One business owner I know had a stroke at seventy, right as he was preparing to sell his company. He had no succession plan, no leadership team in place, and his employees—who feared for their own futures—started looking for other jobs. The business, once thriving, fell apart because the owner hadn’t prepared for the unexpected.
Lesson: Have a plan. Identify potential successors. Put governance structures in place so your business can function even if you can’t.
Distress: When External Forces Threaten Your Business
Economic downturns, lawsuits, natural disasters, and pandemics—these external pressures can put even the strongest businesses under extreme distress. In 2008, businesses collapsed due to the financial crisis. In 2020, COVID-19 forced thousands of companies to shut their doors overnight.
One business owner I know made luxury restaurant menus. When COVID hit and restaurants closed, his business faced extinction. But instead of folding, he pivoted—using his equipment to manufacture plastic dividers for schools. He survived, but many others weren’t so lucky.
Lesson: Always be prepared to pivot. Diversify your business model. Have a financial safety net. Make sure you’re adaptable enough to weather unexpected storms.
Death: The Ultimate Exit Strategy
No one likes to think about death, but it’s the one certainty in life. If you die unexpectedly and don’t have a plan in place, what happens to your business? Too often, I’ve seen grieving families left with nothing because the owner never created a succession plan.
One business owner I knew died suddenly at eighty. He had spent his whole life building his company but never made arrangements for what would happen after he was gone. Within months, the business collapsed. Employees lost their jobs. His family lost their inheritance. A lifetime of hard work disappeared because he never took the time to plan.
Lesson: Have a clear succession plan. Make sure your leadership team is prepared to run the business without you. Document your processes and key relationships so the company can survive even if you’re no longer there.
Preparing for the Inevitable
The 5 D’s are real. They happen every day. The question is—are you prepared? If your business is your legacy, your livelihood, and your greatest achievement, don’t leave it vulnerable. Take the time now to put the right plans in place. Consult with advisors. Draft the necessary legal documents. Build a business that can survive the unexpected.
Because if you don’t, you may find yourself forced into an exit you never saw coming.
Final Thoughts
Business exit planning is more than a procedural necessity—it is a strategic, reflective, and transformative process. By approaching it with the same passion and thoroughness, business owners can create a plan that safeguards their legacy and opens doors to new possibilities. Ultimately, the journey of exit planning is about taking control of your future, ensuring that when the time comes, you exit on your own terms and with confidence.
A well-executed exit plan isn’t just about leaving—it’s about leaving on your terms. Whether your goal is financial security, business legacy, or a stress-free transition, the right planning ensures you exit with confidence.
Want expert guidance for your business exit? Contact us today for a personalized consultation
