Posted on Feb 8th, 2025

Author: Sri Sambhari

Executive Summary

Many business owners delay succession planning, assuming they have plenty of time. However, studies show that 70% of businesses listed for sale never get sold due to a lack of preparation. Early planning ensures a smoother transition, maximizes business value, and protects your legacy. Here’s why business owners should start succession planning now.

------------------------------------------------------------------------------------------------------------------------------------------------------------

1. Most Businesses Never Sell—Without Proper Planning

• The Hard Truth: 70% of businesses listed for sale never get sold (Exit Planning Institute ).
• Why? Poor financial records, lack of clear leadership transition, or over-reliance on the owner.
• Solution: Start planning 3-5 years in advance to make your business attractive to buyers.

2. Your Business’s Value Drops Without a Succession Plan

• Data Point: Businesses with a solid succession plan sell for 20-30% higher valuations (Forbes).
• Why? Buyers pay more for businesses with stable operations and documented processes.
• Solution: Develop standard operating procedures (SOPs) and build a leadership team that can run the business without you.

3. Unexpected Events Can Force a Sale at a Loss

• Statistic: 50% of business exits are forced by health issues, financial hardship, or market shifts (UBS Investor Watch ).
• Why? Sudden sales lead to lower offers as buyers see urgency as a weakness.
• Solution: Set up a plan now so you’re not selling in distress.

4. Employees and Customers Need Stability

• Impact: 40% of employees leave within a year of an unplanned ownership transition.
• Why? Lack of leadership creates uncertainty, reducing confidence in the business’s future.
• Solution: Identify and groom key employees for leadership roles to maintain stability.

5. Taxes and Legal Complexities Take Time to Navigate

• Costly Mistake: Poor planning can lead to double taxation on business sales or higher estate taxes (U.S. Small Business Administration).
• Why? Without structuring the sale properly, you could lose 30-40% of the value to taxes.
• Solution: Work with financial and legal advisors early to optimize tax savings and business structure.

At HiTrend, we specialize in business transitions for small business owners, particularly those considering an exit due to retirement.

We do:

• Acquire businesses
• Business valuation & exit strategy consulting

Fill out this form for a free consultation!