Meet Bob, a business owner who lives, breathes, and sleeps his business. He sets the vision, brings in most sales, and serves as the marketing machine that keeps everything moving. He can't step away because the calls and texts follow him everywhere.
His business is his livelihood as much as it is his purpose and the reason his family is financially secure. Everything he does is for his wife, Sally, and their daughter, Michelle. At the end of a long day, he feels a sense of accomplishment knowing he has provided for them.
Bob dreams of slow mornings with Sally, more time on the golf course, summers at the beach, and winters in warmer climates, but he hasn't written down a plan for how he'll get there.
Sound familiar?
Understanding the Business Wealth Gap
Many business owners do not plan for life after their business. Like Bob, you probably have a vision for retirement: more time with family, pursuing hobbies, making memories, and living the lifestyle you've worked so hard to build.
All of this depends on your business sale generating what you need to support this lifestyle—which is your "wealth gap." It's the difference between what your business will net you (after taxes, fees, and concessions) and what you need to fund your desired retirement.
Any concessions in a sale could be hugely impactful if you need to net a certain amount to maintain your lifestyle and take care of your family.
Common Business Exit Scenarios
Unfortunately, every business owner's story typically ends in one of three ways:
- You stop working and successfully sell your business
- You stop working but no one will buy your business
- You die before selling your business
The odds aren't good. According to the Exit Planning Institute, 70% of businesses that go to market do not sell, and 76% of business owners profoundly regret selling within one year.
Why Most Businesses Fail to Sell
If you're spending your time working in the business instead of on it, you're not alone.
Your business is likely heavily dependent on you. You're probably not planning for your wealth gap—understanding what your business must truly sell for to fund your desired lifestyle.
This is why businesses fail to sell:
- Owner dependency: Buyers see massive risk in a business that can't run without the current owner
- Lack of wealth gap planning: Owners don't understand what they truly need from a sale (net proceeds after taxes and fees)
- Forced exits: Half of businesses are put on the market reactively due to the 5 D's—Death, Disability, Divorce, Disagreement, and Distress
When owners are forced to sell without preparation, the results are often disappointing.
When to Start Preparing Your Business for Sale
Even if you have no intention of selling your business right now, when should you start preparing for its eventual sale? NOW!
With the risk of the 5 D'salways creeping around the corner, you need the peace of mind that your business is sellable just in case the unfortunate does occur.
How to Take Control of Your Business Exit
If you've made your company dependent on you, here's the good news: you can start planning now, on your terms. Don't wait for the 5 D's.
The earlier you begin preparing your business to be sellable and transferable, the more control you have over your outcome, both financially and personally. Business owners who proactively prepare are able to exit on their terms and get the price they need to ensure the next chapter of their lives.
Working with a Certified Exit Planning Advisor (CEPA®) can help you identify gaps that could limit your future financial security and design a roadmap that protects your family, wealth, and legacy.
Exit Planning with a CEPA® at Harford Financial Group
At Harford Financial Group, our team of CEPA®-certified advisors helps business owners align their personal, financial, and business goals so that when the day comes to step away, they're doing it confidently, with purpose and clarity.
Your business is your most valuable asset, and it deserves careful planning. Let's ensure you exit on your own terms and live fully in the next chapter.
Ready to start preparing your business for a successful exit? Contact Harford Financial Group to work with our CEPA® advisors and protect your most valuable asset.