For many entrepreneurs, their business is their retirement plan.

While employees often spend decades contributing to pensions and investment accounts, business owners tend to reinvest profits back into growth. The expectation is simple: build a successful company, sell it one day and use the proceeds to fund retirement.

The problem is that many business owners spend years planning for retirement without ever evaluating whether their business is ready to sell.

A retirement plan built around a future business sale only works if a buyer is willing to purchase the company.

The Assumption That Can Derail Retirement

Many entrepreneurs view their business as their largest financial asset. In fact, Gallup research found that 74% of employer-business owners plan to sell or transfer ownership of their business as part of their retirement plans.

There is nothing inherently wrong with this strategy. Business ownership has created significant wealth for countless entrepreneurs. The issue arises when founders assume that because they have built a profitable company, a successful exit is guaranteed.

Revenue alone does not create value.

Buyers are looking for businesses that can continue operating and growing after the owner leaves. A company that generates strong profits but depends heavily on the founder may be worth far less than the owner expects.

Why Profitable Businesses Struggle to Sell

Business owners often focus on growing revenue, while buyers focus on reducing risk.

From a buyer's perspective, several factors can make a business difficult to acquire:

  • The owner is responsible for most sales.
  • Key customer relationships belong to the founder.
  • Processes exist only in the owner's head.
  • There is no management team capable of running the business independently.
  • Revenue is concentrated among a small number of clients.

When these issues exist, buyers see uncertainty. The more uncertainty a buyer sees, the lower the valuation becomes. This creates a significant retirement planning risk for entrepreneurs who are counting on a future sale to fund their next chapter.

A Wave of Businesses is Heading Toward Transition

The challenge may become even more pronounced over the next decade.

According to research from the McKinsey Institute for Economic Mobility , approximately six million small and medium-sized businesses will face ownership transitions by 2035, representing as much as $5 trillion in enterprise value.

Many of these businesses are owned by baby boomers approaching retirement. As more companies enter the market, founders may find themselves competing for a limited pool of qualified buyers.

In other words, simply deciding to sell may not be enough . Business owners will need to demonstrate why their company is worth buying.

Those who wait until retirement is only a few years away may discover they need significantly more time to prepare than expected.

Retirement Planning Must Include Business Readiness

Traditional retirement planning focuses on savings, investments and estate planning. Those are important considerations, but entrepreneurs should add another question to the conversation:

How much of my retirement plan depends on selling my business?

If the answer is "most of it," then business value becomes a retirement planning issue.

Founders should periodically evaluate whether their company could operate without them. They should understand the current value of the business, identify factors that could reduce buyer interest and create a plan to address those risks well before retirement.

The goal is not simply to build a profitable business. The goal is to build a transferable business.

Many entrepreneurs assume their business will fund retirement. The reality is that a business only becomes a retirement asset when someone is willing to buy it.

The founders who achieve the most successful exits typically begin preparing years before they intend to leave. They reduce founder dependence, build transferable systems and create businesses that can thrive without them.

Retirement planning for business owners should not end with investment accounts and savings targets. It should include a realistic assessment of whether the business is ready to transition when the time comes.

Because the biggest retirement risk for many entrepreneurs is not market volatility. It is discovering too late that the business they planned to sell is not yet ready to be sold.

Melissa Houston, CPA, CEPA , is a Business Value & Financial Strategy Advisor and a Forbes.com contributor who writes about building profitable, sellable businesses.

With more than 25 years of experience in finance and accounting, she helps entrepreneurs increase profit, improve cash flow, and build companies that create long-term wealth. Her work focuses on financial leadership, profit optimization, and increasing business valuation through strategic decision-making.

Melissa is a Certified Exit Planning Advisor (CEPA), specializing in helping founders understand and close the gap between their current business value and its full potential. She works with business owners to strengthen financial performance, reduce risk, and position their companies for successful exits.

A published author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business , Melissa is a recognized voice in financial strategy and entrepreneurial wealth-building.

The opinions expressed in this article are not intended to replace professional accounting or tax advice.