Owner dependence

The degree to which a business needs its owner personally in order to operate. The single biggest discount factor on small-business sale prices.

A business is owner-dependent when the customers come for the owner, the decisions wait for the owner, and the know-how lives in the owner's head. Buyers price it ruthlessly, because whatever only the owner can do walks out the door on handover day. In the extreme, an owner-dependent business has no market price at all: there is nothing transferable to buy.

The everyday cost arrives before any sale: holidays become theoretical and the owner becomes the bottleneck for growth. The fix is systematic rather than heroic: document recurring decisions, move relationships from the person to the business, cross-train single points of failure, and test with real absences. The full sequence is in make your business run without you.