One of the more surprising statistics I’ve come across in recent years is that only about 20% of businesses that are listed for sale actually sell. The exact percentage varies depending on the source, market conditions, and the type of business involved, but the broader conclusion is remarkably consistent: most business owners who intend to sell their businesses never complete a successful transaction.
Most owners are shocked when they hear that. They should be.
After all, many business owners spend decades assuming the business is their largest asset. They pour money back into it year after year, work nights and weekends, sacrifice vacations, and carry an enormous amount of risk. Naturally, they assume that all of that effort is building toward a future sale.
The logic seems straightforward. Build a successful company, grow profits over time, sell the business, and use the proceeds to fund retirement.
The problem is that a successful business and a sellable business are not always the same thing.
I think this disconnect is one of the reasons many business owners become increasingly anxious as retirement approaches. From the outside, everything may look fine. Revenue is strong. Profits are healthy. The business may even be worth several million dollars on paper. Yet underneath that success is a question many owners quietly wrestle with:
What if this business isn’t as sellable as I think it is?
Why Most Owners Assume Their Business Will Sell
It’s not difficult to understand why owners make this assumption.
For years, the business has been the best investment they’ve ever made. It may have generated returns that far exceeded anything available in public markets. It may have funded their lifestyle, paid for their children’s education, and become the largest component of their net worth.
Over time, many owners begin to think of the business as both their current income source and their future retirement account.
In fairness, sometimes that works out exactly as planned.
There are plenty of successful exits. There are owners who receive life-changing offers, sell to strategic buyers, private equity firms, competitors, or key employees, and move into retirement with more money than they ever expected.
But that’s not the experience of every owner.
The reason the 20% statistic catches people’s attention is because it forces them to confront a possibility they may never have seriously considered. Building a profitable business does not automatically create a business that someone else wants to own.
Those are two different achievements.
Profitable and Sellable Are Not Synonyms
One of the biggest mistakes owners make is assuming that profitability and sellability move together.
Sometimes they do.
Often they don’t.
A business can produce an excellent living for its owner while simultaneously being very difficult to sell.
The reason is simple. Owners and buyers tend to view the business through completely different lenses.
The owner sees the business as it exists today. They know the customers. They know the employees. They understand the systems. They know how problems get solved and where opportunities exist.
The buyer is trying to understand what happens after the owner leaves. That distinction matters.
A business owner may say:
- I know every major customer personally.
- Clients call me directly when something important comes up.
- I approve every major decision.
- Nothing leaves the building without my signoff.
I see this quite a bit with business owners around Carmel and Indianapolis. The specifics vary, but the pattern is remarkably similar. Sometimes it’s a physician whose patients only want to see them. Sometimes it’s a construction company where every major bid still runs through the owner. Other times it’s a manufacturing business where decades of customer relationships exist primarily in the founder’s head. The business may be profitable, but a buyer immediately sees the risk if those relationships walk out the door.
To the owner, these may feel like strengths. They demonstrate commitment, expertise, and strong customer relationships.
And look, I deal with the same issues in my own business. But, to a buyer, they often represent risk.
If the owner’s departure threatens customer retention, employee stability, sales growth, or operational continuity, the buyer has a problem. The more dependent the business is on the owner, the less attractive it becomes.
This is one reason buyers spend so much time evaluating management depth, customer concentration, employee retention, operating systems, and organizational structure. They’re not buying what the business was worth yesterday. They’re buying what they believe it can produce tomorrow.
The Two-Week Vacation Test
One of the more interesting ideas that emerged from the research was something called the “two-week vacation test.” The premise is simple. Could you leave your business completely for two weeks without checking email, answering calls, approving decisions, or solving problems?
Many owners already know the answer.
They haven’t taken a true vacation in years.
Some would return to hundreds of emails. Others would return to operational problems that nobody else could resolve. Some suspect the business would function reasonably well for a week or two but would begin struggling shortly thereafter.
This isn’t a criticism. It’s simply reality.
Many successful businesses were built because the owner was willing to do things others wouldn’t do. They worked harder, learned faster, solved more problems, and carried more responsibility.
The challenge is that those same traits can eventually reduce the value of the business if they prevent the company from operating independently.
If the business cannot function without the owner, retirement becomes more difficult and selling becomes more complicated.
The Retirement Problem Hidden Inside the Exit Problem
What makes this issue particularly important is that it often doesn’t reveal itself until later in life.
During the accumulation years, owner dependency may not feel like a problem at all. In fact, it can be a competitive advantage. The owner’s relationships, expertise, and work ethic may be exactly what drives the business’s success.
But retirement changes the equation. Now the owner needs something different from the business. Instead of maximizing growth, they need liquidity. Instead of creating income, they need transferable value. Instead of building the company around themselves, they need the company to function without them.
That’s a difficult transition, especially when most owners have spent decades doing exactly the opposite.
This is also why retirement planning for business owners often looks very different from retirement planning for employees.
An employee may worry about market volatility, Social Security, healthcare costs, and withdrawal strategies.
A business owner has all of those concerns plus another major variable: the future value and marketability of the business itself.
That’s a significant burden to place on a single asset.
Many of the business owners I meet have spent years doing exactly what they should have been doing: reinvesting in the company. Whether it’s adding equipment, hiring employees, acquiring competitors, expanding facilities, or opening additional locations, the business often produced better returns than anything available in public markets. The challenge comes when retirement gets closer and the majority of the family’s wealth is still tied to a single private company.
Why Many Owners Wait Too Long
Another pattern I see is that owners tend to underestimate how long exit preparation takes.
Many assume they’ll begin planning once they’re ready to sell.
Unfortunately, by that point, many of the most valuable improvements either can’t be made or require much more time than expected.
Consider a few common issues:
- Developing a management team may take years.
- Reducing owner dependency may take years.
- Diversifying a concentrated customer base may take years.
- Cleaning up financial reporting may take years.
- Resolving partner disputes may take years.
- Building wealth outside the business may take years.
None of these problems are impossible to solve. The challenge is that they rarely get solved quickly.
The owners who achieve the best outcomes are often the ones who begin preparing long before they intend to leave.
What Successful Owners Tend to Do Differently
The owners who eventually sell on favorable terms often focus on something that sounds almost backward at first.
They spend years making themselves less important.
That doesn’t mean they stop contributing.
It means they gradually transfer responsibilities, strengthen systems, develop leadership, document processes, and create an organization that can operate without constant intervention.
In many cases, they also begin building assets outside the business. Not because they lack confidence in the company. Because they understand that having multiple paths to success creates flexibility.
The goal isn’t to stop believing in the business. The goal is to avoid placing your entire future on a single outcome.
Final Thoughts
The purpose of this article isn’t to suggest that your business won’t sell.
It may sell for far more than you expect.
The point is that many owners assume a future sale is inevitable without ever examining what makes a business attractive to a buyer in the first place.
The 20% statistic is valuable because it forces us to ask better questions. Not just, “What is my business worth?” but “What would make someone want to buy it?” Not just, “When do I want to retire?” but “What needs to happen before retirement becomes realistic?”
Those questions often lead to better decisions years before a business ever goes to market.
And for many owners, that’s where the real value of planning begins. Not when the business is listed for sale, but when you start building a company that someone else would actually want to own.
