12 Jan Is Your Business Ready to Fund Your Retirement?
For many business owners, their company is not just a source of income. It is their largest retirement asset. But owning a business and being able to sell it for enough to support your retirement are two very different things. As we move toward 2026, a growing wave of Baby Boomer exits means only owners with sale-ready businesses are likely to close their wealth gap and protect what they have spent decades building.
If your retirement plan depends on selling your business, the most important question is not when you want to exit. It is whether your business is actually capable of funding that exit.
Understanding the Exit Gap
One of the biggest risks to a successful retirement is the gap between what an owner believes their business is worth and what the market is willing to pay. This is often referred to as the valuation gap.
Many owners rely on outdated rules of thumb or informal “cocktail party multiples.” The problem is that these assumptions often do not hold up when buyers review financials, risk factors, and growth sustainability. When the real number comes in lower than expected, the consequences can be significant, including delayed retirement or reduced lifestyle choices.
Today, millions of closely held businesses are owned by Baby Boomers, representing trillions of dollars in illiquid wealth. With a large percentage of these owners planning to exit over the next several years, buyers will have more options and greater leverage. Businesses that look like owner-dependent jobs are easier to pass over. Businesses that look like transferable investments are more likely to attract serious interest.
Three Questions That Reveal Retirement Readiness
To understand whether your business can realistically support your retirement, you need to look beyond top-line revenue and last year’s profit. The goal is to assess the underlying financial and operational health that buyers evaluate.
#1. Is your wealth gap clearly measured?
You cannot plan for a retirement target you have not quantified. A professional valuation establishes a baseline and helps clarify whether the current value of your business aligns with your post-exit financial needs.
If there is a shortfall, identifying it early matters. It creates time to work on value drivers that may help narrow the gap before a sale becomes necessary rather than optional.
This is the first step in the Determine phase, knowing where you stand today.
#2. How dependent is the business on you?
Buyers increasingly focus on operational resilience. If the owner is the primary rainmaker, decision-maker, or problem-solver, the business carries additional risk in the eyes of the market.
When a business struggles to operate without its founder, buyers often apply a valuation discount to account for that uncertainty. In many cases, value improves when leadership, systems, and customer relationships are distributed across the organization rather than concentrated in one person.
Reducing owner dependency is a core part of the Build phase, strengthening the business so it can function beyond you.
#3. Are your earnings properly normalized?
Many small and lower middle market businesses are valued using Seller’s Discretionary Earnings, or SDE. This metric adjusts reported profits to reflect the true cash flow available to a new owner.
Normalizing earnings often involves identifying legitimate add-backs such as personal expenses, one-time costs, or non-recurring items that run through the business. When documented correctly, these adjustments can help buyers better understand the company’s earning power. When handled poorly, they can raise red flags.
Clean, well-supported financials tend to reduce friction during due diligence and improve credibility with buyers.
Preparing for the 2026 Exit Environment
With more owners planning to exit over a similar time horizon, buyers are likely to be selective. Businesses that are prepared, documented, and transferable tend to stand out.
Retirement-ready owners shift from operating out of exhaustion to planning with intent. They treat valuation as a performance scorecard, not a guessing game.
Waiting until you are ready to stop working to address these issues increases risk. In many cases, meaningful value improvement takes 12 to 24 months of focused effort. That preparation window can make the difference between a forced sale and a controlled exit.
This is where the Realize phase begins, aligning timing, value, and personal goals so the business can support the next chapter of life.
Take the First Step Toward Your Next Chapter
Clarity is the foundation of any successful exit strategy. Whether retirement is one year away or five, understanding your current position gives you more options and more control.
If your business is expected to fund your retirement, the most practical place to start is with an objective view of its value and risks.
Get your baseline. Use our Business Valuation Calculator to see an estimated value in minutes.
Identify your risks. Take the Value Scorecard to understand what may be limiting your valuation.
Discuss your roadmap. Schedule a free 15-minute business assessment to talk through your retirement goals with a valuation professional.
Disclaimer: This content is for general educational purposes only and should not be considered financial, legal, or tax advice. Every business and situation is different.