How do you know when it's time to think about selling?

Most owners do not have a single moment when they decide it is time. It is more like a slow accumulation. A Sunday afternoon where you do not feel like going in Monday morning. A conversation with your spouse that you keep putting off. A health scare. A competitor who sold last year and seems to be doing fine. You start doing the math in your head. That is the signal.

According to Ernst and Young research cited in the Exit Planning Institute’s 2023 national survey of 1,162 business owners, the average family business owner begins thinking about stepping back at age 63. Most planning specialists say you need 3 to 5 years to prepare properly. Which means if you are reading this and you are 58 or 60, you are right on time. If you are 65, you are already behind.

See what actually prepares a business for a good outcome

The signals most owners recognize but ignore

There are two kinds of signals: the ones you feel and the ones you can measure.

The ones you feel come first. Burnout is more common than most owners admit. You have been doing this for 20 or 30 years and the problems that used to energize you now just feel like the same problems repeating. Your best people can run most of it without you, or they cannot run any of it without you, and either way you are tired of being the ceiling. Your spouse has been patient for a long time.

The ones you can measure come later. A big year that might be hard to repeat. A customer who represents too much of your revenue. A key employee who is getting older and whose replacement you have not trained. A building or equipment that needs real capital. These are not death sentences for the business. But they matter enormously to a buyer, and they take time to address.

Why waiting until you “feel ready” usually costs you

The problem with waiting until you feel ready is that feeling ready and being prepared are completely different things. Feeling ready often means something bad happened. A health event. A partner who wants out. A year where the business did not perform and you stopped believing in it.

About half of all business sales are unplanned, according to the Exit Planning Institute. They are triggered by what planners call the five D’s: death, disability, divorce, disagreement, or financial distress. Owners who sell under those conditions almost always get less. Forced sales typically yield 20 to 50% less than a planned sale where the owner had time to clean things up and go to market on their own terms.

Understand the five D’s and how they affect your options

The owners who do best are not the ones who held on the longest. They are the ones who started thinking about it while the business was still performing well and they still had energy to make it better.

Retirement is still the number one reason owners sell

In BizBuySell’s 2024 Insight Report, 38% of sellers across all ages cited retirement as their primary reason for selling. Among baby boomer owners specifically, that number rises to 43%.

That might sound obvious. But what it means in practice is that the decision to sell is usually a life decision, not a business decision. It is less “my business is worth a lot right now” and more “I am 64 and I want to do something else with whatever time I have left.”

The owners who are not Baby Boomers yet forget this. They assume selling is something you decide to do when the spreadsheet says it is optimal. The owners who have been in business for 30 years know it is more personal than that.

What “thinking about it” actually looks like in practice

Thinking about selling does not mean calling a broker. It means getting your own honest read on the business first.

That starts with understanding what the business is actually worth. Not what you hope it is worth. Not a number you calculated on the back of an envelope based on revenue. An actual figure based on how buyers value businesses like yours.

Find out how buyers calculate what a business is worth

It also means looking honestly at how dependent the business is on you personally. If you stopped showing up, what would happen in the first 30 days? In the first 90? That question has a direct effect on what a buyer will pay and how fast a deal would close.

The cost nobody puts in a spreadsheet

Most of the conversation about timing is financial. Multiples, valuations, market conditions, what interest rates do to deal volume. That is all real. But it is not actually why most owners regret waiting.

The owners who waited too long usually say the same kinds of things. They got hurt and had to sell in a hurry. They burned out and stopped caring about the outcome before the deal closed. They spent their 60s in the building instead of with people they will not get more time with. Their grandkids grew up while they were handling the same problems they had been handling for 25 years.

Nobody warns you about that version of waiting too long. The financial cost of an unplanned sale is real and measurable. The personal cost is harder to calculate and harder to recover from.

The right time to start is when the business is still running well, you still have energy to see it through, and you still have enough runway to get to the outcome you actually want. That is a narrower window than most owners realize.

The signals that mean you should start now, not later

You do not have to be certain. But here are the signs that mean it is worth at least getting a number:

You are over 60. You have 20 or more years in the business. You have not had a formal valuation in the last 2 years. You do not have a written plan for what happens if you get sick tomorrow. Your retirement plan is mostly the business. You have not told your key people what the long-term picture looks like.

If most of those are true, you are not behind. But you are at the point where thinking about it needs to turn into actually doing something about it. The first step is not a broker. It is understanding what you have.