Why Only 1 in 5 Businesses Successfully Sell
I recently had the pleasure of joining Maria Lloyd’s My Local Marketer podcast to talk about one of the most overlooked aspects of running a business: business exit planning. It was a genuinely enjoyable conversation, and if you own or run a small or medium-sized business, I think you will find it well worth a listen.
Why Business Exit Planning Matters More Than You Think
The headline statistic is stark. Research consistently shows that only around one in five businesses that are put up for sale actually complete a successful transaction. That means four out of five owners either walk away with far less than they hoped for, or cannot sell at all. The reasons range from unrealistic valuations to poor financial records, but one factor comes up time and again: a lack of preparation.
At Exit Factor UK, the whole premise of what my partner Darryl Bates-Brownsword and I do is to tackle this problem head on. We launched our Reading operation in early 2026, bringing Exit Factor’s proven methodology to the UK market. The goal is simple: help business owners build companies that are genuinely valuable, replicable, and not entirely dependent on the person who founded them.
From Civil Engineering to Exit Planning
One of the things Maria and I talked about was my own career journey. I did not start out in business consulting. My background is in civil engineering, which might seem a long way from business exit planning, but the skills transfer more than you might expect. Engineering teaches you to think systematically, to identify where things can go wrong, and to build structures that hold up under pressure. That turns out to be exactly what a well-run, exit-ready business needs.
Over the years I moved into marketing and business advisory work, and it was through that path that I came to focus on the specific challenges SME owners face when they want to step back from their business, whether that means selling, passing it on, or simply having the freedom to choose.
What Does “Exit-Ready” Actually Mean?
This is a question Maria pushed me to answer clearly, and rightly so. Being exit-ready does not mean you are about to sell tomorrow. It means your business is built in a way that it could be sold, if and when the time is right, at a price that reflects its true value.
A business that is exit-ready is well-run, properly documented, and not entirely dependent on the owner showing up every day. If removing you from the equation causes the business to wobble, then the business is not exit-ready. Buyers are not purchasing your effort. They are purchasing an asset that will continue to perform without you.
Profit, Valuation and the Tax Trap
One of the shifts I have made in how I think about business success is moving away from the instinct to suppress profit for tax purposes. It is entirely understandable. Nobody wants to pay more tax than they have to. But when it comes to selling a business, the valuation is almost always based on profit. A business that has been structured to show minimal profit on paper is a business that will appear to have minimal value to a buyer.
What I encourage owners to do instead is to think about demonstrating consistent, clean profit streams. Reducing risk and showing reliable performance over time is what increases a company’s attractiveness, and therefore its sale price.
The Iceberg of Ignorance
We also discussed a concept I find genuinely useful when working with business owners: the Iceberg of Ignorance. This idea, developed from research by Sidney Yoshida in 1989, illustrates just how much senior leaders and business owners do not know about what is happening at the front line of their own organisations.
The research found that frontline staff are aware of 100% of the problems in an organisation. Their supervisors know about 74% of those problems. Middle managers are aware of just 9%. And top management? Only 4%.
It is a striking picture, and one that most business owners recognise when they hear it. The point is not to alarm anyone. It is to encourage owners to actively engage with their teams, to ask the questions, and to create a culture where problems are surfaced early rather than festering out of sight. A business where the owner genuinely knows what is going on, and where staff feel comfortable raising issues, is a healthier, more valuable business.
Building a Culture That Adds Value
The Iceberg of Ignorance is not just an interesting idea. It has practical implications for business valuation. When a prospective buyer looks at your business, they are assessing risk. A business where information flows freely, where systems are well documented, and where the team operates effectively without constant intervention from the owner, is a lower-risk investment. Lower risk means higher value.
This is why culture and operational structure are not soft, peripheral concerns. They are central to what makes a business sellable.
Exit Factor’s Ambitions for the UK
I was also able to share some news about where Exit Factor UK is headed. Our ambition is to open 30 offices across the UK within the next five years. That is a significant undertaking, and it reflects both the scale of the opportunity and the genuine need for this kind of service among UK business owners.
The SME sector in the UK is enormous. Thousands of business owners are approaching retirement age, or simply reaching a point in their lives where they want the freedom to move on. Many of them have spent decades building something valuable. The tragedy is when those owners are unable to realise that value simply because they did not start planning early enough.
The Best Time to Start Is Now
If there is one message I keep coming back to, it is this: do not put off the conversation. The best time to think about your exit is not when you are ready to leave. It is years before that, when you still have time to make the changes that will maximise your options.
Getting an early assessment of your business is not a commitment to sell. It is simply giving yourself information, and with that information comes the freedom to make better decisions about your future.
You can find out more about what we do and get in touch via the Exit Factor UK website. And if you have not listened to the podcast episode yet, I would encourage you to do so. Maria is a brilliant host and I hope you enjoy the conversation as much as I did.
>>> listen to the podcast episode
References and Further Reading
My Local Marketer Podcast, Episode 88 – Why Only 1 in 5 Businesses Successfully Sell, And How to Be One of Them. https://mylocalmarketer.co.uk/podcast/88/</a>
Exit Factor UK – Exit Planning and Valuation for UK Business Owners. https://exitfactor.co.uk/
DueDilio – Business Sale Failure Rate 2026: Why 80% of Listings Fail. https://www.duedilio.com/business-sale-failure-rate/</a>
Corporate Rebels – How Real Leaders Melt The Iceberg of Ignorance With Humility. https://www.corporate-rebels.com/blog/iceberg-of-ignorance
Exit Planning Institute – How to Make Your Business More Saleable. https://blog.exit-planning-institute.org/make-your-business-more-saleable
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