“Our business is too small to sell.”
I hear this from founders running profitable businesses generating £30k-£80k in owner earnings. They assume exits are for tech unicorns and seven-figure enterprises.
They’re wrong.
If your small business generates consistent profit, someone will buy it. The question isn’t whether you can exit – it’s whether you know how to position it for the buyers who want what you’ve built.
Why Small Business Exits Make Perfect Sense
Not everyone needs a £5m exit and three years gardening leave. Sometimes a £250k net proceeds funds exactly what you need:
- The deposit on that smallholding you’ve been eyeing
- Two years to retrain in something you actually care about
- The buffer to start a business you’re passionate about, not just profitable at
- Early semi-retirement with consultancy income topping up
The industry obsesses over maximising valuations. We’re interested in right-sizing them to your actual life plans.
Your exit doesn’t need to make headlines. It needs to make Tuesday morning work for you.
How Micro Business Valuations Work
Forget EBITDA multiples and discounted cash flows. Under £500k turnover, buyers use Seller’s Discretionary Earnings (SDE).
SDE = Net Profit + Your Salary + Benefits + Discretionary Expenses
Basically, everything the business generates that the owner can take home. Your salary, that company car, the pension contributions, the mobile phone contract, even some of those “business development” meals.
Typical multiples: 1.5x to 3x SDE, depending on:
- How dependent the business is on you personally
- Revenue predictability and customer concentration
- How systematised your operations are
- Growth trajectory and market positioning
A business generating £80k SDE might sell for £120k-£240k. After transaction costs and tax (budget 20-30% of gross proceeds), you might net £90k-£170k.
Not life-changing money. But potentially life-changing freedom.
Who Actually Buys Small Businesses
Your buyer isn’t a private equity firm or strategic corporate. They’re:
The Lifestyle Buyer: Someone escaping corporate life who wants to buy themselves a better job. They’re looking for consistent income and reasonable hours, not explosive growth.
The Serial Entrepreneur: Owns three or four small businesses, bolts on operational efficiencies, keeps the formula that works. Yours becomes number five.
The Existing Competitor: Your local rival who can absorb your customer base, eliminate duplicate overheads, and add 30% to their bottom line overnight.
The Next You: Someone at your stage five years ago, looking to shortcut the startup phase by buying proven revenue.
These buyers think differently to corporate acquirers. They’re buying income streams and operational systems, not IP and growth curves.
The Owner-Dependency Problem (And How To Fix It)
Here’s the brutal truth: if you ARE the business, you’re not selling a business. You’re selling someone a job with your face on it.
Buyers discount heavily for owner-dependency. Some won’t even make an offer.
How to de-risk yourself:
Productise your service: Turn “bespoke consultancy” into “three packages with clear deliverables.” Turn “I build websites” into “our four-stage website delivery process.” Make it repeatable without you.
Document everything: Client onboarding, service delivery, quality control, problem resolution. If it’s in your head, it dies with your exit.
Build a team (even a small one): One skilled operator who can deliver your core service removes 80% of the buyer’s risk. They’re not buying you anymore – they’re buying a system.
Create recurring revenue: Subscription models, retainer agreements, annual maintenance contracts. Predictable income commands premium multiples.
Systematise sales and marketing: If leads only come through your personal network, the business evaporates post-exit. Document your lead generation, nurture sequences, conversion process.
The Add-Back Minefield
SDE valuations rely on add-backs – those personal expenses that inflate your true earnings. But buyers challenge everything.
Add-backs that hold up:
- Your actual salary (documented, consistent)
- Vehicle costs (business mileage logs, clear usage)
- Pension contributions (documented in accounts)
- Professional subscriptions directly tied to service delivery
Add-backs that collapse under scrutiny:
- “Marketing expenses” with no documentation
- That home office without clear allocation
- “R&D” you can’t prove
- Family members on payroll without clear roles
Clean up your add-backs two years before exit. Remove the questionable ones, document the legitimate ones forensically.
Making The Numbers Work For Your Life
Here’s where most small business exit planning goes wrong: founders chase valuations based on effort invested rather than value a buyer will actually pay.
“I’ve worked 80-hour weeks for 10 years building this. It’s worth at least £500k.”
The buyer thinks: “This generates £60k owner earnings. I’ll pay £150k.”
One of these people is right. It’s not the founder.
Your business isn’t worth what you’ve sacrificed to build it. It’s worth what it will generate for someone else, at their risk level, in their hands.
Work backwards from reality:
- What do you need to do on Tuesday morning? (Retrain, relocate, start over, semi-retire)
- What does that cost in real money?
- What net proceeds do you need after tax and transaction costs? (Add 40% to your target)
- What sale price delivers that?
- Is that price realistic for your SDE and market position?
- If not, what changes get you there – or do you need to adjust your Tuesday morning plans?
A £250k exit that actually happens and funds your next chapter beats chasing £500k based on “what you deserve” and never selling at all.
Price it for the buyer’s logic, not your emotional investment. Then plan your life around what’s genuinely achievable.
Start Early, Exit Clean
The difference between a successful small business exit and a failed one isn’t usually the business quality. It’s the preparation time.
Small businesses sell fast – often 3-6 months from listing to completion. But the work that makes them sellable takes 18-24 months:
- Productising services
- Building documentation
- Reducing owner-dependency
- Cleaning up add-backs
- Creating recurring revenue
Start now. Even if you’re not planning to exit for three years, the changes that make your business sellable also make it more valuable, more profitable, and frankly more enjoyable to run.
Your Business Is Worth More Than You Think (To The Right Buyer)
That “small” business you’ve built? It’s someone else’s dream acquisition. It generates reliable income. It’s proven in the market. It solves real problems.
You don’t need to be Innocent Drinks to exit successfully. You need to be systematised, documented, and honest about the value you’ve created.
Your exit doesn’t need to make headlines. It needs to make Tuesday morning work.
Both halves of your exit story matter – the business exit and the personal transition. Get them both right.
How Exitologists Can Help
At Exitologists, we specialise in both halves of your exit story – the business mechanics and the personal transition.
We help small business owners:
- Value realistically: Understand what your business is genuinely worth to buyers, not what you wish it was worth
- Prepare systematically: Productise services, reduce owner-dependency, clean up add-backs, and build the documentation that commands better multiples
- Plan backwards: Start with what you need on Tuesday morning and work back to what that requires from your exit
- Avoid the pitfalls: We’ve lived through successful and failed exits. We know where small business sales collapse and how to prevent it
We’re not here to promise you inflated valuations or theoretical multiples. We’re here to help you achieve an exit that actually happens and funds the life you want next.
Because we’ve succeeded and can help you and also we’ve failed, so you don’t have to.
