By Chris Spratling, Author of The Exit Roadmap
According to Brooks Holdings, 48% of business owners who want to sell have no exit strategy at all. Meanwhile, Forbes reports that 58% of small- and medium-sized business owners have never had their company formally valued.
For many entrepreneurs, the idea of “exit planning” feels like something to deal with later – when retirement is on the horizon or when the business has reached its peak. Yet, the truth is stark: every owner will exit their business one day, whether by design or by default. The real question is not if, but how prepared you’ll be when that day arrives.
The uncomfortable statistics
The odds are heavily stacked against business owners who fail to plan. According to BizBuySell’s Insight Report, only 20% of businesses listed for sale each year actually sell within twelve months, and 65% of businesses that go to market never sell at all.
Even among those who do achieve a sale, the outcome is often disappointing. A Gold Family Wealth “Enrichment Report” found that more than 50% of business owners are unhappy after selling their company, while 75% regret the sale altogether – primarily because they received less than they expected.
These statistics paint a clear picture: successful exits don’t happen by luck or circumstance. They happen because owners plan early, prepare well, and understand what buyers value most.
Why every business needs an exit plan
An exit plan isn’t a “nice to have.” It’s a strategic roadmap for value creation, resilience, and peace of mind. It ensures that if opportunity knocks – or unforeseen events occur – you can act from a position of strength, not desperation.
Owners with an exit plan:
- Make better operational and strategic decisions, because they’re guided by a defined end goal.
- De-risk their business by reducing reliance on key individuals (especially themselves).
- Increase enterprise value year after year, by focusing on the same factors that acquirers use to assess worth.
- Retain control over the timing, structure, and value of their exit.
Contrast that with the owner who receives a sudden offer, faces a health issue, or loses a key client – and discovers too late that the business isn’t sale-ready. Without a plan, you’ll be forced to sell on the buyer’s terms, not yours.
Start with the end in mind
When coaching entrepreneurs through the sale process, I often quote the maxim: “You can’t build value for an invisible buyer.”
Every effective exit starts with clarity – knowing why you might sell, how much you’d need to secure financial freedom, and what success looks like afterwards.
Research by the Federation of Small Businesses (FSB) shows that 80-90% of a typical SME owner’s total wealth is tied up in their company. That means unlocking business value is often the single most important financial event of an entrepreneur’s life.
Yet, most owners can’t answer a simple question: “How much do I need to sell to fund my ideal post-sale lifestyle?” That’s where exit planning becomes not just a commercial exercise, but a personal one.
The ten drivers of value
Across my 30 years advising entrepreneurs and private equity investors, I’ve identified ten key drivers that directly influence the saleability and value of a business. These are the levers that serious buyers assess – and that you, as the owner, can control:
- A history of consistent, profitable growth. Predictable performance commands a premium.
- Clear potential to scale. Buyers pay for what your business can become, not just what it is today.
- Recurring or contracted revenues. Subscription or retainer-based models dramatically increase valuation multiples.
- Strong market positioning. Distinctive brands with loyal customers reduce perceived risk.
- Low dependence on key staff. Systems should be stronger than individuals.
- Low dependence on key customers. No single client should represent more than 10% of revenue.
- Low dependence on you, the owner. If the business can’t run without you, it isn’t yet an investable asset.
- Healthy working capital. A strong cash position supports higher offers and smoother negotiations.
- High customer loyalty. Businesses with a positive Net Promoter Score (NPS) attract higher multiples.
- Protected intellectual property. Patents, trademarks, software and data are tangible sources of value.
Focus relentlessly on improving these areas, and you don’t just make your company more attractive to buyers – you make it more efficient, profitable, and enjoyable to run.
Valuation reality check
Valuation is where optimism often collides with reality. Many entrepreneurs overestimate what their business is worth – often by 30-50%, according to BizBuySell and Forbes small business data.
A proper valuation isn’t based on rumours or multiples you’ve “heard about.” It’s built on tangible factors: growth rate, risk profile, recurring revenue, and strategic fit.
And yet, the Forbes “Next Avenue Report” found that 58% of small- and medium-sized businesses have never been formally valued. That’s like trying to retire without ever checking your pension balance.
A formal valuation – reviewed every 12-18 months – not only benchmarks progress, but also identifies which levers to pull next. It transforms value-building from a guessing game into a measurable strategy.
Think like a buyer
Buyers – whether trade, financial, or private – all share one goal: to invest in a business that generates a reliable return with minimal risk.
They’ll look for:
- Predictable, diversified revenue streams.
- A credible management team that can run the company without you.
- A strong market position, ideally with IP protection.
- Clean, transparent financials and contracts.
The more certainty you can demonstrate in these areas, the higher the price they’ll pay – because you’ve reduced their risk.
As one private equity director once told me, “We don’t buy businesses – we buy future cashflows.” The more stable and scalable those cash flows appear, the more valuable your company becomes.
Timing is everything
Owners often ask, “When’s the right time to sell?” My answer: when your business is ready, your market is buoyant, and you’re emotionally prepared.
Industry data shows that the average SME sale process takes between 18 and 36 months from preparation to completion. The earlier you start preparing, the greater your ability to choose your moment – rather than being forced into it.
Life after the sale
An often-overlooked part of exit planning is what happens next. The Gold Family Wealth Report found that three out of four owners regretted selling their business, largely because they hadn’t planned what to do afterwards.
That’s why exit planning should always include a “personal transition plan”: what you’ll do with your time, your wealth, and your sense of purpose once the deal is done. Without it, freedom can feel strangely empty.
The bottom line
You only sell your business once. Get it right, and you secure the rewards of years of hard work. Get it wrong, and you risk joining the majority who walk away disappointed.
The difference isn’t luck or timing – it’s planning.
Plan ahead, know what you want, know what your buyer wants, and be honest about what needs to change.
Do that, and you’ll not only maximise your sale value – you’ll build a business that’s stronger, more scalable, and more enjoyable to own right now.
References
- Wilson, T. (2018). “48% Of Business Owners Who Want To Sell Have No Exit Strategy.” Brooks Holdings. https://kbrooksholding.com/2018/02/48-business-owners-want-sell-no-exit-strategy
- De Pau, L. (2024). “When Should You Decide To Sell Your Business?” Forbes. https://www.forbes.com/sites/liendepau/2024/08/01/when-should-you-decide-to-sell-your-business
- Prince, R. A., & Bowen, J. J. (2017). The Enrichment Report. Gold Family Wealth. https://growfl.com/why-are-50-of-business-owners-unhappy-after-they-sell-their-company
- Debussy, A. BizBuySell Insight Report. BizBuySell. https://www.bizbuysell.com/insight-report
- Kowalski, C. (2023). “Understanding Exit Planning.” Exit Planning Institute. https://blog.exit-planning-institute.org/understanding-exit-planning-epi-and-maus-partnership
- Hannon, K. (2018). “How Women Entrepreneurs Should Prepare To Sell A Business.” Forbes. https://www.forbes.com/sites/nextavenue/2018/05/24/how-women-entrepreneurs-should-prepare-to-sell-a-business
Chris Spratling is the Managing Director of Chalkhill Blue and author of The Exit Roadmap: The Insider’s Guide to Selling Your Business Profitably.
You can discover how sale-ready your business really is by taking the Exit Readiness Survey at chalkhillblue.org/exitreadiness-survey.