Why 80% of Businesses Don’t Sell: A Deep Dive into Exit Planning

In entrepreneurship, 80% of companies listed for sale never find a buyer, and 70% of family businesses fail to pass on to the next generation. This stark reality raises a critical question: Why do so many business owners neglect exit planning, especially when it could significantly affect their company's legacy and financial future?

This relentless pursuit, while admirable, often leads owners to become perpetual firefighters, constantly dealing with the crisis of the day.?

However, this analogy misses a darker truth: many business owners inadvertently play the arsonist role in their frenzy to extinguish fires, undermining the value they seek to create in their businesses.

By focusing solely on immediate problems, business owners must pay more attention to the strategic planning necessary to build long-term value in their companies. This oversight makes it difficult to sell or transfer their businesses when the time comes.

When business owners consider exiting, it is often a knee-jerk reaction to burnout, boredom, or the allure of new ventures. Our research suggests that exit motivation typically falls into two categories: running from the business due to negative factors or running towards a new chapter in life.?

Unfortunately, this reactive approach to exit planning further diminishes company value, as owners need more time, resources, and inclination to prepare their business for a successful sale or transfer.

Blind Spots and Missed Opportunities

Another significant hurdle is the myriad of blind spots that business owners have concerning their exit strategy. Many need to assess their personal financial needs post-exit accurately, the accurate valuation of their company, or the intricate details of a successful transition, such as tax implications and legal considerations.?

Astonishingly, some business owners dedicate more time to planning a family holiday than they do to orchestrate one of their lives' most critical financial events.

The solution to this problem is straightforward yet challenging: meticulous, proactive planning. Business owners who take the time to develop a comprehensive exit plan gain control over the process, enabling them to exit on their terms and timelines. Effective planning aligns personal, family, and business goals, ensuring a transition that maximises value while minimising tax liabilities and other costs.

The Call to Action

If you're a business owner, the message is clear: the time to start planning your exit is before you intend to step away. By doing so, you can ensure a legacy that reflects the hard work and dedication you've poured into your business rather than joining the 80% of companies that never find their successor.

Please start laying the groundwork for a successful exit strategy before it's too late. Your business and your peace of mind deserve that foresight.

?? Schedule a call?Here