Survey Reveals Almost Half of Small Business Owners Plan to Exit Within the Next Five Years

by | Jan 10, 2021

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Survey Reveals Almost Half of Small Business Owners Plan to Exit Within the Next Five Years

by | Jan 10, 2021

Analysis from The Value Builder System shows entrepreneurs’ changing attitudes around exit planning as a result of COVID-19.

This pessimism seems to be impacting business owners’ future plans for their exit. Traditionally, many small businesses have been passed down from one generation to the next, but the pandemic has resulted in owners looking for different options—perhaps to avoid burdening their offspring with the stress they’ve endured over the last few months. Owners are now 28% less likely to consider a family transition than they were before the pandemic and 16% more likely to want to sell their business to a third party.

The economic impact of COVID-19 has been swift and unrelenting for small business owners. Many businesses continue to face challenges of profitability and solvency, resulting in uncertainty about the future of their life’s work and, ultimately, forcing owners to consider shuttering or selling their businesses sooner than anticipated.

Researchers at The Value Builder System™ analyzed 9,765 questionnaires completed by business owners from around the world who use their software. Researchers divided the sample set into two cohorts:

  1. Pre-COVID (June 15, 2019 – March 14, 2020)
  2. During COVID (March 15 – Sept. 15, 2020)

Researchers identified a number of differences when comparing the Pre-COVID cohort to the During COVID group. Among the During COVID group, researchers identified:

  • A 350 percent increase in the proportion of owners expecting their revenue to decrease when compared to owners who completed the questionnaire Pre-COVID.
  • A 17 percent increase in the proportion of owners who plan to sell their business to a third party and a corresponding 42 percent drop in the proportion of owners who plan to pass their business down to their children.
  • A 20 percent decrease in the proportion of owners planning to hang on to their business for 10 or more years. Almost half of the During COVID cohort now say they plan to exit their business within five years.

“Small business owners have been punched in the mouth by COVID-19,” said John Warrillow, the founder & CEO of The Value Builder System™ and author of the upcoming book, The Art of Selling Your Business. “Owners have endured a lot since the pandemic started and many are now looking to sell externally instead of passing the stresses of their business to their kids. Hundreds of thousands of businesses have been lost and the ones that survived are now looking to get out at levels we’ve never seen before.”

View the full The Value Builder SystemTM questionnaire results here.

About The Value Builder System™ The Value Builder System™ is a simple software used by thousands of businesses worldwide for building the value of a company. Offered by a global network of independent advisors known as Certified Value Builders, The Value Builder System™ incorporates several diagnostic tools, including the Value Builder Score. Those businesses that achieve a Value Builder Score of 90 or greater are worth double our average-performing business.

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