Most business owners are so focused on the daily operations of their business, they don’t plan their transition to retirement. Owners might think that they can sell the business and fund their retirement, end of story. That can happen, but things seldom go as envisioned. First of all, most businesses don’t sell. On the popular business-for-sale websites, about 20% of the businesses sell. 80% DON’T sell. (VR Business Brokers success rate is higher, but still less than half). That would be a catastrophic event for your retirement.
By the way, those businesses that do sell may not sell for what you expect. There are several ways to value your business; one common method is “fair market value”, which is preferred by most CPAs. This is an academic method favored by the courts that differs from the business broker methodology that is more focused on actually selling the business, a method called the “most probable selling price”. You do need to get your business valued to do your financial planning, make sure you get a realistic valuation from people who are focused on selling businesses.