Every entrepreneur eventually arrives at a pivotal question: Should I continue to grow my company or prepare for an exit? This decision isn’t just financial; it involves personal aspirations, market conditions, and long-term wealth planning. Whether you’re experiencing rapid growth, stagnation, or burnout, knowing when to double down or step away requires a thoughtful evaluation of several key factors.
Understanding Valuation and the Wealth Gap
The foundation of your decision lies in your company’s valuation—what it’s worth in the eyes of investors or potential buyers. This is typically assessed through revenue multiples, profitability, industry trends, and market demand. However, a strong valuation alone doesn’t dictate whether you should sell or scale.
One crucial metric is the wealth gap, which represents the difference between your current financial position and the amount of money required to sustain your lifestyle after exiting the business. If selling today doesn’t bridge this gap, it may not be the right time to exit. Conversely, if a sale provides financial security and the opportunity to pursue other passions, an exit might be the best move.
Key Wealth Gap Considerations:
- Target Financial Security – What do you need to retire or transition comfortably?
- Post-Exit Income Sources – Will you rely on investments, passive income, or another business?
- Current Business Value vs. Future Potential – Would staying in the business yield a higher exit value later?
Your Next Act: What Comes After the Business?
Before making an exit, consider your post-sale plans. Entrepreneurs who sell often face a loss of identity or purpose. What will you do next? Whether it’s launching a new venture, investing, consulting, or philanthropy, having a clear “next act” will help determine if now is the right time to exit.
Other Critical Factors to Weigh
- Market Timing & Industry Trends
Exiting during a peak market period or when industry demand is high can maximize your return. Conversely, selling during an economic downturn could mean leaving money on the table. - Growth Potential vs. Risk
If the business has significant untapped potential but also growing risks, weigh the pros and cons. Expanding into new markets or launching new products may require capital, time, and energy. - Leadership & Succession Planning
If stepping away, do you have a strong management team in place? A well-prepared leadership transition can increase your company’s value and appeal to buyers. - Personal Burnout & Passion
Entrepreneurs often reach a point where they feel drained. If you lack the motivation to continue scaling, an exit might be the right choice.
Relevant Statistics
- 88% of business owners lack a written transition plan, yet 50% expect to transition within 10 years (Exit Planning Institute).
- Only 20%–30% of businesses listed for sale actually sell, meaning preparation is key (BizBuySell).
- 75% of business owners regret selling their business within a year because they didn’t have a next act planned (M&A Advisor).
The decision to grow or exit your company is complex and personal. It requires a deep dive into financials, market trends, and personal aspirations. Assessing valuation, wealth gap, and your post-exit vision can provide clarity. Whether you choose to scale or sell, strategic planning will ensure you make the best decision for your future.
