The Short Version

• Between 70% and 80% of small businesses listed for sale never actually sell.
• Owners should start preparing 24 to 36 months before an exit — ideally from day one.
• Common mistakes include messy financials, overestimating value and not engaging with buyers early.
• Buyers look beyond financials, focusing on risk factors like customer concentration and owner dependency.
• Even if you don’t plan to sell soon, documenting operations and securing a valuation now boosts readiness and value.
• Small business sales are on the rise, with entrepreneurship-through-acquisition groups fueling demand.

How early should small business owners prepare to sell?

“From day one,” says Joe Brown, small business owners should be thinking about how they’ll eventually sell. Brown is co-founder and CEO of SMB.co, a marketplace built to make buying and selling small businesses as straightforward as browsing homes online. After building and selling companies — and losing money on one he didn’t realize he could sell — Brown has seen how often owners are caught unprepared for an exit.

Too often, owners only consider selling when they’re burned out or ready to retire. That reactive approach leads to missed opportunities: between 70% and 80% of small businesses listed for sale never find a buyer, according to The Big Exit. Brown argues that exit planning isn’t just about selling; it’s about protecting and growing the business so it can thrive under the next owner.

In this conversation, he shares why so many sales fall through, the costly mistakes to avoid and the steps business owners can take now to boost valuation and keep their options open.

What’s the case for early exit planning?

Startups often think about an exit from day one, but small business owners rarely have that mindset. Many are only thinking about it now because of the publicity around the “silver tsunami” — Baby Boomer and Gen X owners getting older and looking to retire. I think it used to be a golden age for businesses, and there wasn’t much reason to sell. I don’t think anyone really starts a small business with the mindset of: “I’m going to sell it.”

We encourage owners to think 24 to 36 months ahead, though often sales happen because of life circumstances: retirement, health issues, a small decline in the market or new competitors. That’s when they think: “Okay, now might be a good time to sell.” I just don’t think it’s necessarily been on a lot of people’s minds because they didn’t need to sell [previously].

Why do most small businesses fail to sell?

Two reasons. First, they’re not prepared: financials aren’t in order, [profit and loss statements] aren’t clean and owners don’t understand valuation methods like [earnings before interest, taxes, depreciation and amortization] or [seller’s discretionary earnings]. Many think they can just multiply revenue, but that’s not how buyers calculate value.

Second, owners often overestimate worth. That’s understandable — you’ve poured years into your business — but expectations need to match the market. Selling is about de-risking for buyers. They look for red, yellow and green flags: overreliance on the owner, lack of employees, or customer concentration. If you plan 12 to 24 months ahead, you can address those risks and turn weaknesses into strengths.

What’s a costly misstep owners make during the sale process?

Not talking to buyers. Owners get emails all the time from people saying: “Hey, I’m interested in buying your business,” or from brokers offering to help sell. You might be thinking: “I’m not even considering that right now,” but honestly, I’d take them up on a free chat. Most of the time they’ll give you reports, and the buyer will tell you exactly what they’re looking for.

Use those conversations as market insights for yourself. Ask questions: “Are you reaching out to other owners? Do you know if others are currently selling? What are buyers in your industry looking for? What made my business attractive from an acquisition perspective?”

If they say: “That’s actually a little lower in revenue than I’m looking for,” or “This piece of your business seems risky,” that helps you identify potential risk factors to fix before you sell. These don’t need to be long conversations — it’s really just about gathering info to improve.

What usually drives owners to sell — and why is waiting risky?

Honestly, there’s no perfect sign. Often it’s triggered by life events, and owners want to sell within the next 12 months. That’s a very tight turnaround, which we don’t recommend. You never want to look desperate to sell. It’s better to plan ahead.

Owners already plan for marketing and operations, and they’re amazing at those things. It’s just a matter of fitting exit planning into that process. Even if you don’t plan to sell for two years, you should ask: “What would we need in place if we did?”

How can owners prepare today, even if they’re years from selling?

Talk to someone — whether it’s us or a local advisor — to understand what your business is worth today. We provide valuations for free, and others do as well.

The basics [are to] get your last three years of P&Ls in order and document daily operations. I’d say 90% of owners haven’t outlined who handles what in a structured way. If you’re savvy, go get those things yourself. Use QuickBooks, document your processes then work with an advisor to get a standardized valuation.

What non-financial factors make a business appealing to buyers?

Customer base and concentration are pretty important. For example, if you have 100 customers and 50% of your revenue comes from just five of them, that’s critical. If a new operator came in, bought the business and then lost those five customers, revenue would decline by 50%. Those metrics are key.

What trends are you seeing in small business sales right now?

Yes. There’s definitely been a big lift. There’s been a significant increase in the past two quarters, year-over-year, for acquisitions. Entrepreneurship-through-acquisition groups are growing fast in cities across the country. Generally, we’re seeing more excitement from owners around selling their businesses. There’s never been more opportunity.