Should I sell my business or keep running it?

Compare the after-tax sale check compounding in a portfolio against the business growing to a later, taxed exit at the same multiple. At typical small-business numbers — 3.5× SDE, 25% tax, 6% portfolio return — holding needs sustained earnings growth above roughly 7% a year to win a seven-year horizon, before pricing the owner's hours.

Is hiring a general manager worth it for a small business owner?

Price it as (hold wealth minus step-back wealth) divided by the extra hours you'd keep working: if staying at the wheel pays less per hour than the manager costs per hour, delegation wins. A manager-run business also often sells at a higher multiple because it's buyable without the owner.

What is a typical small business sale multiple?

Main-street service businesses sell around 2–3.5× seller's discretionary earnings, niche B2B with recurring contracts 3–5×, software higher. Owner-dependence is the largest discount; recurring revenue the largest premium — and any estimate deserves a ±1× stress test.

Sell the Business, Hold, or Hire a Manager — Priced at the Horizon

The sale check, opened up

Three doors at year 7

The doors over time

Wealth on each path at every horizon. Selling wins early (the check compounds while you sleep); holding wins late if the growth is real. The crossings are where patience starts paying. Hover to explore.

The multiple, stress-tested

For the 2 a.m. meeting

How we calculate

What is included

All three doors are read at the same horizon. Sell: the after-tax check compounds at your portfolio return. Hold: earnings grow at your rate with you driving, and the business sells at the same multiple at the horizon, taxed then. Step back: earnings net of the manager’s cost grow at the honest manager-rate, sold and taxed the same way. Earnings are treated as reinvested — that is what the growth rates mean — so no distribution stream is double-counted. The gauge prices the one number nobody computes: (hold − step back) divided by the extra hours you’d work — what staying at the wheel actually pays per hour, read against the manager’s own hourly cost.

What is estimated or left out

One multiple serves all paths and dates — in reality a manager-run business often sells higher (it’s buyable without you) and a shrinking one lower. Earn-outs, seller financing, partial sales, dividends along the way, and the deal-structure tax spread (asset vs stock sale) are all outside — and all argue for an adviser holding this page’s numbers. The model also can’t price the two things owners actually decide on: identity and sleep.

The formula, in plain words

sell:  W = SDE × multiple × (1 − tax) × (1+r)^n
hold:  W = SDE × (1+g₁)^n × multiple × (1 − tax)
step:  W = (SDE − manager) × (1+g₂)^n × multiple × (1 − tax)
staying pays = (hold − step) ÷ extra hours · vs the manager’s hourly

Common questions

Should I sell my business now or keep growing it?: Arithmetic first: selling wins when the after-tax check compounding in a portfolio beats the business’s growth to a later, taxed exit. At a 3.5× multiple, 25% tax and 6% portfolio return, holding needs roughly 7%+ real earnings growth to win a 7-year horizon — and that’s before pricing your hours. Then the honest questions: would you rebuy this job today, and does the growth depend on the very hours you’re tired of?
What does hiring a manager cost me at exit?: Their loaded cost compounds out of earnings, and growth usually cools — but the door often costs less than owners fear and buys back 2,000+ hours a year. Run the gauge: if holding pays you less per extra hour than the manager costs per hour, you are literally paying yourself less than the manager to do the manager’s job. And a business that runs without you frequently commands a higher multiple.
What multiple is my business worth?: Main-street service businesses change hands at 2–3.5× SDE; niche B2B with contracts 3–5×; software more. Owner-dependence is the biggest discount and recurring revenue the biggest premium. Get one broker opinion and one real comp before believing any number — then stress it ±1× as the table here does, because the market at your exit date is the one that counts.

Sell, Hold or Step Back