Exit Planning Statistics That Will Shock You

Many business owners pour their hearts into building their companies, but few pause to consider the eventual endgame. These exit planning statistics that will shock you reveal just how prevalent that oversight is.

The Importance of Exit Planning

Before diving into the statistics, it’s important to understand why smart business exit planning is so essential in the first place. According to the Exit Planning Institute, 75% of business owners would like to exit their businesses within the next ten years. With such readiness to exit, preparation and planning are key. Whether you’re planning to sell your business a year from now or ten, having a written transition plan will help ensure a smooth business exit that maximizes value and minimizes disruptions. Exit planning can also significantly impact an owner’s net worth and long-term financial plans.

3 Surprising Exit Planning Statistics to Learn From

Still not convinced you need to prioritize exit planning? Whether you’re a seasoned business owner or just starting out on your entrepreneurial journey, these insights from the 2023 Q4 Market Pulse Report may reshape your perspective.

Most Business Owners Do No Exit Planning at All

Despite the significant impact it can have on your future, many owners simply do not exit plan, leaving themselves vulnerable to potential pitfalls and missed opportunities.

Take a look at the numbers broken down by deal size:

• In the <$500K sector: 74% of business owners did no exit planning
• In the $500K- $1MM sector: 67% of business owners did no exit planning
• In the $1MM-$2MM sector: 63% of business owners did no exit planning
• In the $2MM-$5MM sector: 57% of business owners did no exit planning

If They Do, They Rush Through It

Even for business owners who do engage in exit planning, the process is often rushed, with a majority moving from initial consultation to market listing in less than a year. However, effective exit planning requires careful consideration and preparation, ideally starting long before the actual business sale. Giving yourself ample time to plan will help you avoid oversights, undervaluation, and other obstacles.

The Smaller Business, the Less Likely Owners Are to Exit Plan

The fact that small business owners are less likely to engage in exit planning may not initially strike as surprising. After all, bigger businesses are more likely to have the resources and structures in place for more comprehensive planning. However, consider that small business owners often pour a lot of emotional and personal investment into their companies. While this may also be true for larger businesses, small business owners often have more intimate connections and fewer potential successors within the company, making exit planning even more critical for their future.

Partner With a Business Broker and Ensure a Successful Exit

If you’re ready to kickstart the exit planning process, don’t hesitate to reach out to a professional for guidance. Sunbelt Business Brokers has a team of experts who can help you craft an exit strategy unique to your business, financial situation, and personal goals. Find a location near you to get in touch with a broker!