Preparing Your Business for a Successful Exit, with Tom Gledhill

The challenge of selling a small business is far more complex than many entrepreneurs realize. In the latest Dead Pixels Society podcast episode with Tom Gledhill of XITpro, he reports the statistic that only 20% of small businesses that go to market actually sell. This revelation should serve as a wake-up call for business owners planning their exit strategy, especially those in the photography and imaging industry where many businesses are operated by owners approaching retirement age.

Gledhill brings a unique dual perspective to business sales, having been both a successful business owner who sold his company to a large public corporation and a business broker who has worked with hundreds of small businesses. This combination of experiences has given him invaluable insights into why so many businesses fail to sell and what owners can do to position themselves in the successful 20%.

According to Gledhill, two primary factors prevent businesses from selling: unrealistic owner expectations about valuation and the owner being so central to operations that the business cannot function without them. Many small business owners, particularly in creative fields like photography, fall into what Gledhill calls the “lifestyle entrepreneur” category – they’re excellent at their craft but may not have developed the business infrastructure necessary for a successful transition. They grow their company to a comfortable level that supports their lifestyle but haven’t built systems or trained staff that would allow the business to continue without them.

For business owners looking to increase their company’s value before selling, Gledhillemphasizes focusing on two critical areas: employees and systems. Well-trained, loyal employees who can maintain operations are essential, as are well-documented, effective, and efficient systems. These two elements address the fundamental problem of the owner being the business. When processes exist only in the owner’s head, there’s little value for a potential buyer who needs assurance that the business can continue successfully after the purchase.

The timeline for preparing a business for sale is longer than most owners anticipate. Gledhill recommends beginning preparations at least two to three years before you plan to sell. This preparation includes documenting all business processes (whether through text, video, or other media), training employees thoroughly, and potentially identifying key staff who might be interested in purchasing the business. The documentation of systems becomes even more critical in today’s business environment, where implementing AI solutions depends on well-defined workflows.

One particularly interesting approach Gledhill discussed is employee ownership. Through his XITplus program, they’ve developed a model where they purchase small businesses, implement AI to improve efficiency and scale operations, train key employees for leadership roles, and eventually sell the business to those employees once the company has sufficient cash flow and trained leadership. This approach can preserve continuity for customers, vendors, and remaining staff while providing a viable exit for the original owner.

The broader impact of small business closures extends beyond just the owner. When a small business fails to transition successfully, the owner typically loses most of their net worth, employees lose their jobs, vendors lose clients, and communities lose both economic activity and morale. This ripple effect demonstrates why proper business transition planning is so important not just for owners but for the entire business ecosystem.