80% of Businesses Don’t Sell—Will Yours Be One of Them?
As a business owner, you’ve dedicated years of hard work and passion into building something you believe has value. But when it’s time to step away and sell, a surprising truth often awaits: 80% of businesses never sell.
That’s right. Four out of five business owners who plan to cash out and move on end up facing disappointment. Rather than making a profitable exit, they either close up shop, walk away with nothing, or settle for much less than they hoped.
So, why does this happen? And more importantly, how can you avoid being part of that 80%?
In my book, What Is Your Exit Strategy?, I break down the key reasons most businesses don’t sell and offer practical advice on how you can increase your chances of a successful, profitable sale—whether your exit is one year or ten years away.
The Harsh Reality: Why Most Businesses Don’t Sell
A common misconception is that when it’s time to sell, buyers will be lined up, ready to take over. But the reality is, most businesses fail to meet the criteria buyers are looking for. Here are the main reasons why:
1. The Business Relies Too Much on You
If your business can’t function without your direct involvement, it’s essentially a job, not a business. Buyers want a company that can run smoothly without the owner’s day-to-day presence.
2. Too Dependent on a Few Clients
If most of your revenue comes from just a handful of customers, your business is at risk. Buyers prefer businesses with a diversified customer base for long-term stability.
3. Unorganized Financials
Inconsistent revenue, messy bookkeeping, and a lack of clear financial records are red flags for buyers. If they can’t easily see your profitability and stability, they’re not likely to invest.
4. Limited Growth Potential
Many businesses generate enough revenue to support the owner’s lifestyle but don’t have room to grow. Buyers are looking for businesses with clear potential to scale.
5. No Standardized Processes
If your business relies on “tribal knowledge” rather than documented, repeatable processes, potential buyers may struggle to see how they could successfully take over.
6. Industry Risks and Disruptions
If your business operates in an industry that’s at risk of being disrupted by AI, robotics, or changing regulations, buyers might hesitate. Adaptability is crucial to maintaining value in an evolving market.
7. Overvalued Business
Many business owners overestimate their company’s worth. When the fundamentals aren’t in place to back up the asking price, buyers may be put off.
How to Be Part of the 20% That Sells
The good news? With the right approach, your business can avoid the fate of the 80% that fail to sell. Here’s how to set your business up for a successful exit:
• Reduce Owner Dependency
Build a strong team, delegate responsibilities, and develop systems that allow the business to run without you. This makes it more attractive to potential buyers.
• Diversify Your Customer Base
Work on expanding your customer base and spreading revenue across more clients. This reduces risk and increases buyer confidence.
• Get Your Financials in Order
Work with professionals to clean up your financial records. Accurate, transparent books make your business much more appealing to buyers.
• Create a Scalable Business Model
Identify opportunities for growth. Buyers want to see that your business has the potential to expand, whether that means reaching new markets or increasing revenue.
• Document Your Processes
Establish clear systems and procedures for running your business. By documenting key operations, you make it easier for a buyer to take over without disruption.
• Stay Ahead of Market Trends
Keep your business adaptable to industry changes and technological advancements to ensure it remains competitive and appealing to buyers.
• Understand Your Business’s Value
Get a professional valuation and ensure your expectations align with market trends. Knowing the true worth of your business will help you set a realistic price and attract buyers.
What’s Your Exit Strategy?
Many business owners don’t start thinking about selling until they’re already ready to retire or burned out. But by then, it may be too late to set yourself up for the best outcome. The ideal time to plan your exit is years in advance.
That’s why I wrote What Is Your Exit Strategy?—to guide business owners like you through the process of planning for a profitable, successful exit. By avoiding common mistakes and maximizing your business’s value, you can make sure your future is secure when the time comes to sell.
Are you ready to build a business that sells instead of one that fades away?
Let’s start the conversation! Drop a comment below or message me to discuss your exit strategy.
