In the spring of 2020, I heard a story on the radio about baby boomers that want to retire yet are struggling with exiting their small businesses. As an entrepreneur, this struck me as odd – how can this be an issue? A few hours later, I was searching online for more information and was shocked at the magnitude of the problem.
Over the next 15 years, small businesses in the U.S. owned by baby boomers need to transition an estimated $10 trillion in value. One may think this is a great opportunity for other generations to buy one of these small businesses. However, it is not that simple. First, there is an issue of supply and demand – there are more businesses than there are buyers. Secondly, not all businesses will attract a third-party buyer. In fact, 80% of small business owners plan to sell their business to fund retirement, but less than 20% of those listed online actually sell.
When I learned this, I wanted to know two things. First, what happens to the 80% that are listed online and do not sell, and secondly, why don’t more of these businesses find a buyer? There cannot be that many ‘bad’ businesses out there.
I started researching the market and talking to small business owners, and a few key themes kept coming up:
- A significant number of business owners plan to sell their business to a current business partner, employee, or someone in their local community. They do not need help finding a buyer.
- Exposure to a broad audience via a website is not all that helpful when selling a local business. In all likelihood, the buyer will be local, so why spend money to reach lots of eyeballs well outside the community?
- Most small businesses in the U.S. are not solid prospects for a business broker because they are worth less than $3M in value. Business brokers are paid a percentage of the sale price and naturally focus on businesses with an enterprise value of at least $5M.
- Almost every business owner I spoke with has never been through the process of exiting a business before, yet they are left to figure this out on their own.
When I started this journey, I told myself that ExitGuide should not focus on just one outcome. ExitGuide has a mission: to help small business owners market their business a local buyer, get help selling to a known buyer, plan for an exit that may be months or years away, or sell assets and dissolve the business.
The best way to help millions of small business owners is to provide information for business owners to explore and understand their options. Therefore I have created tools and resources to manage the best-suited process for different businesses and goals. If door #1 isn’t “it,” we will help unlock door #2, or door #3. If an owner is uncertain about what to do, we are here to help.
If you are a small business owner seeking help and support with exiting your business, I hope you will give us the opportunity to help. Our Resources center has numerous articles about how to prepare for an exit, different options for exiting your business, and explanations of some of the jargon that will come up during the process. Our free assessment provides an estimated value for your business as well as more content about valuations, and creating an exit plan. When you are ready to take action, there are two premium offerings for you to choose from for creating a plan and managing your process. You have the option to handle this on your own or get support from a professional exit coach to help you through the process.
As a longtime entrepreneur, I believe the opportunities for ExitGuide customers are tremendous. Small business owners have not had access to the solid, concrete help they actually need, until now. This immense void is what inspired me to create ExitGuide. We provide the appropriate support and resources to make a big decision. Then we help manage the process best suited to their situation, not someone else’s business model or financial incentive.
Founder and CEO