A few years back, I heard a story from a business owner who told me what turned out to be a horror story. This owner had planned to hold his business forever, but then sudden health issues came up, and he found himself in a situation where he had to sell his business quickly.
Because he hadn't been planning on selling, he'd been operating loosely.
Personal expenses ran through the company.
The books weren’t buttoned up.
Processes lived in his head, not in SOPs.
None of that mattered day to day. He knew the business inside and out. His team was experienced. Everything “worked.”
But when he started talking to brokers, he heard the same thing time and again: you don't have a sellable business.
That story is way more common than most owners want to admit. We don’t have perfect data, but the estimates are uncomfortable.
57% of businesses are owned by Baby Boomers and over 80% don't have an exit plan (source). That means the vast majority could just shut down.
For those hoping for a sale to fund their retirement, this is a stark outlook. Most owners aren’t choosing to build a business that can’t sell. They’re just not thinking about it yet. They assume they’ll deal with it later.
The problem is that “later” often shows up as a deadline. That’s why I wanted to bring this topic to you now.
My friend Ryan Ray has lived on both sides of this equation. He’s run large businesses and worked as a business broker, sitting across the table from owners who thought they were ready… and weren’t. He also just closed a major acquisition himself. So big, in fact, that I texted him “you alive?” because he disappeared for a bit. Turns out he was deep in the trenches getting a deal across the finish line.
When Ryan told me he was putting together a cohort to help owners intentionally build sell-ready businesses, I didn’t hesitate to say yes to being involved.
This week’s article is Ryan laying out the reality most owners don’t want to face:
Most businesses are built for lifestyle. Most owners expect a premium exit anyway.
Those two things are not the same.
Read this not as “I’m selling soon,” but as “Am I accidentally making my business unsellable?”
And if this hits close to home, you can learn more about the Exit-Ready Intensive Ryan is running here.
Now, here’s Ryan.
LIFESTYLE VS SELLABLE BUSINESS: WHICH ONE ARE YOU ACTUALLY BUILDING?
Why 80% of Businesses Never Sell (And How to Be the 20%)
written by Ryan Ray Sr (Follow on X / Subscribe on Youtube)
Is 2026 the year you finally sell your business?
Before you start counting the cash, we need to have a serious conversation. According to the Exit Planning Institute, only 20% to 30% of businesses that go to market actually sell.
That means 70% to 80% of owners list their companies and get zero (or zero good) offers.
The problem is that most owners are building a Lifestyle Business but expecting to sell it like a Sellable Business.
If you want to exit for a premium, not just a fire sale, you need to understand the five pillars that buyers actually care about.
FINANCIAL HEALTH: DO YOUR NUMBERS TELL THE TRUTH?
The first thing a buyer looks at is your books. If you are running your personal life through your business, you are destroying your exit value.
@SMBJackieHirsch recently saw an owner who ran a boat house renovation through his company to save $250k in taxes. It sounded smart until he went to sell. That $250k expense lowered his EBITDA. When applied to a 3.5x multiple, that "tax savings" cost him nearly $1 million in the final sale price.
To be sellable, you need:
- Clean Books: Stop expensing your family vacations, renovations, and personal vehicles.
- Auditable Numbers: Buyers (and banks) need to verify your profit.
- Explanation of Swings: If you had a massive dip in 2023, you need a documented reason (e.g., "We lost a key employee, replaced them, and systems are now fixed").
- No Cash Games: If you are taking cash under the table, you cannot claim it as profit when you sell. If it’s not on the tax return, it didn't happen.
RISK EXPOSURE: WHAT COULD BREAK THIS BUSINESS?
Buyers view your business through the lens of risk. You might know that "Client A" has been with you for 20 years and is loyal. A buyer sees "Client A" as a threat who might leave the moment you do.
The Golden Rule of Concentration: No single customer should make up more than 10% to 20% of your revenue. If losing one client breaks your business, you don't have a business; you have a fragile contract.
Other red flags to fix immediately:
- Legal Issues: Settle open lawsuits and pay unpaid fines.
- Worker Classification: Ensure your contractors aren't actually employees (W2 vs. 1099 issues can kill deals).
- Key Staff: Do you have "Golden Handcuffs" (incentives) to ensure key staff stay after you leave?
OWNER INDEPENDENCE: THE "THAILAND TEST"
This is the hardest pill for owners to swallow. If you are the superhero of your business (e.g. putting out fires, closing every big deal, and making every decision), your business is worthless without you.
The Test: Can you go to Thailand for 30 days, turn off your phone, and come back to a business that hasn't just survived, but thrived?
- Support, Not Rescue: You should be supporting your team, not rescuing them.
- Decision Authority: Your staff must be empowered to make decisions on pricing, hiring, and operations without your sign-off.
THE SCALE ENGINE: CAN IT GROW WITHOUT BREAKING?
A buyer isn't only paying for what you did yesterday; they are paying for what the business will do tomorrow. If growing from $10M to $15M revenue requires you (the owner) to work 80 hours a week, the business is not scalable.
You need a "Scale Engine":
- SOPs (Standard Operating Procedures): These must be written down, used daily, and reviewed weekly.
- Pricing Guardrails: Your sales team should know they can sell between 13% and 17% margin, for example. They shouldn't need to call you for approval on every discount.
- Hiring Pipeline: Do you know exactly who you need to hire when you hit the next revenue milestone?
STRATEGIC POSITION: WHY DO YOU WIN?
Finally, why does your business win in the market? If the answer is "Because I have great relationships," you are in trouble. Relationships must live with the company, not the owner.
Buyers want to see that customers choose you for a clear, transferable reason. Think speed, quality, proprietary tech, or brand reputation. They don't want to hear customers stay because of your personal relationships.
YOUR NEXT STEP
Most owners overestimate their business value and underestimate the time it takes to fix these issues. This is a 6 to 12-month process, minimum.
Don't wait until you have to sell. Start building a sellable asset today.
Would you like to know where you stand? I have a Google Sheet assessment with 50 categories to help you score your "Exit Readiness." Click this link to access it.
