Who Will Own Your Business Next?

Nobody Wants to Price Their Own Replacement

Succession planning is like writing a will. Everyone agrees it is important. Almost nobody sits down to do it. And the reason is the same in both cases: it forces you to imagine a version of the world where you are not there anymore. For a business owner who has spent 20 years building something, that is a deeply uncomfortable exercise.

But the emotional resistance is only part of the problem. The mechanics are genuinely hard. Unlike a house, there is no Zillow for a 15-person electrical contracting firm. You cannot plug in an address and get a number. Valuing a small business requires sorting through years of financials, adjusting for the owner’s salary and perks, and guessing how much of the revenue would survive if the owner left. Most owners have never done this math, and the answers are not always flattering.

Then there is the deeper issue. In most small businesses, the owner IS the product. The client relationships live in their phone. The vendor terms were negotiated over a handshake. The processes exist in their head, not in a manual. A buyer is not just purchasing revenue. They are purchasing a bet that the revenue survives after the person who created it walks away.

You might assume there is an obvious internal candidate, a longtime manager who could take over. For companies with 50 or more employees, that sometimes exists. For a 10-person company, it almost never does. The best employee might be a great technician or salesperson, but they rarely have the capital or the desire to buy the business.

Brokers could help bridge the gap, but most M&A advisors will not touch a deal under $1 million. The commissions are too small to justify the work. That leaves the owner alone with a problem they do not know how to solve and no obvious person to call. So they do what most people do with their will. They put it off.

Ask yourself this: could you hand someone your phone, your QuickBooks login, and your top-ten client list, then walk away for six months? The gap between your answer and reality is the succession problem.

Where You Sit in This

Maybe you are the owner who is 5 to 15 years from wanting to step away. Your stake is whether your business will be worth anything on the day you leave, or whether it just evaporates.

Maybe you are a founder who could buy one of these businesses instead of starting from scratch. Your stake is spotting the opportunity before the owner simply locks the door and retires.

Maybe you are neither buying nor selling, but one of your critical vendors or partners is a solo founder in their sixties. Your stake is continuity. And some of you are in two of these seats at once.

If You’re Five Years Out and Think You Have Time, You Don’t

The time to start making your business sellable is at least three years before you want to leave. That is not a suggestion. It is the minimum window that most buyers need. They want to see the business run without you for at least one full annual cycle. If you plan to retire in 2031, the preparation starts now.

Seller’s Discretionary Earnings (SDE) = net profit + owner’s salary + owner perks + one-time expenses.

That single number is what a buyer uses to decide what your business is worth. Small service businesses typically sell for 2 to 4 times their SDE. A business with $200,000 in SDE might sell for $400,000 to $800,000. Knowing your SDE today gives you a clear target and reveals where the gaps are.

The next task is getting the knowledge out of your head. Every process that only you understand is not an asset. It is a liability. Start writing down how recurring work gets done. Who handles what. Where the contracts are. What the vendor terms look like. This is not glamorous work, but it is the single biggest factor in whether a buyer says yes or walks.

Think about who the buyer might be. There are three common types. An employee who knows the business already (but may need financing help). A competitor who wants your client list. Or an outside buyer, often someone leaving a corporate job who wants to own a business. Each type needs different things from you during a transition. An employee needs mentoring. A competitor needs clean data. An outsider needs documentation of everything.

Most small acquisitions are financed through SBA 7(a) loans. The buyer borrows, not you. That matters because it means your ideal buyer does not need $500,000 in cash. They need roughly 10% down and a solid application. Understanding how SBA loan ownership rules work can help you avoid surprises late in a deal.

Some sellers also negotiate an earn-out, where they stay on part-time for a year or two and receive a portion of the sale price over time. This can make the deal easier for the buyer and give you a smoother exit. But it only works if the business can already function day-to-day without you running everything.

If you run a 12-person marketing agency and want to retire in 2031, the single highest-value thing you can do this quarter is write down every recurring client deliverable and name who besides you can execute it. If that list is short, you know where to focus. For broader guidance on when to time a major business move, the same principles apply here.

The Cheapest Business You Could Start Is One Someone Already Built

The version of entrepreneurship that gets celebrated is starting from zero. A blank LLC, a laptop, and a dream. But buying a profitable plumbing company or bookkeeping practice with eight years of clients is often less risky and cheaper when you account for how many startups fail.

Consider this. Over 532,000 new business applications were filed in January 2026 alone. Many of those businesses will not survive three years. A business with eight years of revenue and a real client base has already cleared the hardest part. You are buying proof, not a hypothesis.

Finding these businesses is not complicated. BizBuySell is the largest online marketplace for small businesses for sale. Your local SBDC (Small Business Development Center, a free government-funded resource) can connect you to owners looking to sell. And direct outreach works too. If you know an owner in your industry who is in their sixties, a respectful conversation can go a long way.

What should you look for? Recurring revenue is the best signal. A business where clients pay monthly or return on a predictable schedule is worth far more than one that depends on constant new sales. Beyond that, watch for these red flags:

• One client accounts for 40% or more of total revenue. If that client leaves, the business collapses.
• The owner personally handles all key relationships. No employees have direct client contact.
• Financial records are incomplete, disorganized, or kept in spreadsheets with no clear trail.
• The business has no written processes. Everything runs on the owner’s memory and habits.

SBA 7(a) loans are the standard way small acquisitions get financed. A buyer typically puts down 10% of the purchase price and repays the rest over a 10-year term. The SBA also has specific rules about buyer eligibility, including a citizenship requirement for ownership that is worth understanding before you get deep into a deal.

None of this is easy. Due diligence takes months. Negotiations stall. Some deals fall apart. But buying an existing cash flow stream, even an imperfect one, often beats spending two years and $150,000 trying to build revenue from nothing.

When Your Best Supplier Just Stops Answering

Imagine this. Your 20-person agency relies on a freelance dev shop run by a 62-year-old founder. He retires next spring. His two senior developers scatter to other jobs. Your development pipeline stalls for three months while you scramble to find replacements.

That scenario is playing out right now across industries. And you do not have to be buying or selling a business to feel the impact. You just have to depend on one.

Pull up your accounts payable from last quarter. Look at your top five vendors and partners. For each one, ask a simple question: is there one person who signs every invoice and answers every call? If the answer is yes, that relationship is your exposure.

The fix is straightforward. Have a backup sourced before you need one. Not a signed contract. Just a name, a conversation, and a rough understanding of pricing. You want a plan B sitting in a folder, not a crisis response.

Most owners will tell you their rough timeline if you ask directly. Frame it as planning ahead, not as prying. Something like, “We want to make sure we’re set up for the long term. Are you thinking about any changes in the next few years?” That is a normal business conversation, not an awkward one.

There is also an upside here. When a competitor’s owner retires and the business dissolves, their best employees hit the open market. That is a hiring window you should watch for.

1 What 14 Months of Selling a Business Actually Looks Like

Most people imagine selling a business takes a few weeks. Sign some papers, shake hands, deposit a check. The reality is 12 to 18 months from start to finish, as the timeline below shows. Knowing that upfront prevents panic when the process feels slow.

Phase 1 (months 1-2). The owner decides to sell and gets a rough valuation. At this scale, that usually means hiring a business appraiser or working with a broker to estimate what the business would fetch. It is not an exact science. Think of it as a well-informed guess based on your SDE, your industry, and comparable sales.

Phase 2 (months 3-6). The business gets listed on a marketplace like BizBuySell, or the owner quietly shops it to known contacts. “Quietly” matters here because employees, clients, and vendors can get nervous if they hear the business is for sale. Many owners tell no one until a serious buyer is already in the picture.

Phase 3 (months 6-9). A buyer emerges and both sides sign a letter of intent (a short document that says “we agree on the rough terms and will now move to a deeper review”). The LOI is not a final deal. It is a handshake that opens the door to the next phase.

Phase 4 (months 9-11). Due diligence. If the phrase sounds like something from a corporate thriller, think of it as the buyer looking under the hood before buying a used car. Except the car is your profit-and-loss statement, your lease, and your client contracts. The buyer’s accountant and lawyer go through everything. This is where most deals die. The number one killer is messy books. If the financials do not add up cleanly, the buyer walks. Years of sloppy QuickBooks entries or mixing personal and business expenses can destroy a sale.

Phase 5 (months 11-14). The SBA loan gets approved and both sides close the deal. After closing, the seller typically stays on for three to six months to introduce the buyer to clients, walk them through operations, and handle the handoff. This transition period is often built into the purchase agreement.

One more thing worth knowing. Most small business sales are structured as “asset sales,” meaning the buyer purchases the equipment, client list, and brand, but not the legal entity itself. This is simpler and cleaner for both sides. The alternative, buying the LLC or corporation directly, can carry hidden liabilities that scare off buyers.

The Talent That’s About to Hit the Market

The Fox Business report estimates tens of millions of jobs are tied to businesses whose owners have no succession plan. When those businesses close instead of selling, the employees do not vanish. They enter the labor market. If you have been struggling to hire in a tight labor market, that is a real opportunity.

But it cuts both ways. If a competitor acquires one of those businesses and keeps the team intact, you now face a stronger rival with deeper bench strength. The same retirement wave that frees up talent can also consolidate it against you.

Pay attention to what is happening in your local market. Owner retirements are not abstract. They show up as “going out of business” signs, as sudden LinkedIn activity from people you recognize, and as acquisition announcements in your trade press.

One Move Before July