Only 8 percent of businesses offered for sale are actually sold in the UK, and that statistic is likely similar for other countries. There are probably three main reasons: 1) some businesses don’t have value; 2) in other situations, there is a wide valuation gap between buyer and seller; 3) often there are risks in a business that a buyer is unwilling to assume.

A privately held business is perhaps the most illiquid form of investment. It may take many months, even years, to sell a company.

So how can one best maximize the chances of a successful sale? I would suggest paying attention to the following five areas:

1. Know thyself. Does the business owner really want to sell? Particularly for those business owners facing retirement, there is often deep psychological resistance to selling a business. Giving up travel, an expense account and a life with a mission can be difficult, especially if moving to retirement. Some owners may get to the final phase of a negotiation, get cold feet, and suddenly withdraw, without fully understanding the reasons themselves. Bottom line: business owners need to understand their own motivations, and when exiting to retire, need to plan and prepare themselves for the subsequent phase in their lives.

2. Understand your objectives. Is the objective to maximize transaction revenues? Or reaching a predefined minimum price? Speed of a transaction? Looking after future family generations? Often objectives can be contradictory: maximizing speed, for example, tends to reduce price. It helps to have a written definition of objectives. Few things focus the mind like putting objectives in writing. Then set a plan for achieving your objectives.

3. Build scale and profitability. Most people intuitively understand that the more profitable a business, the easier it is to sell. But it is perhaps counter-intuitive to learn that selling a $10-$20 million business is actually easier to sell than a $1-$2 million business. Larger businesses typically have more critical mass, better systems, better staffing and governance. Hence there are typically more potential buyers for larger businesses. A small business often does not “move the needle” for many buyers.

4. Build the business from the perspective of an investor. Every now and then, a business owner should be like a fly on the wall, and assess his or her own business objectively, from the perspective of an investor. (Or ask an objective outsider to do it.) Is this a business that would be desirable for investors? Which investors? How much would the business be worth?

I once advised a business owner that every dollar generated in his fledgling online business generated eight times as much value as in his conventional business. He immediately postponed any plans for sale, and decided to work for a few years on building up his online business.

Sometimes I find businesses that are involved in too many incompatible business lines, hence not of interest to any buyer. (For example, one of my clients had businesses in construction, aviation-related manufacturing, and non-core assets.) Such companies generally require restructuring prior to sale.

Both of the above situations illustrate how a business should be built from the perspective of investors. There is often a paradigm shift involved when business owners who build a business in their own image realizes the need to build a business that will survive, most often via a sale, and hence be of interest to investors. Neglecting this rule can result in a business that is illiquid or unsaleable.

5. Begin exit planning as early as possible. I am often asked when the best time to begin planning an exit is. My answer: when you consider buying or founding a business. It’s never too early. Too many business owners spend decades building a business without planning for exit. It’s then often too late to do estate planning or tax planning, let alone applying all of the principles mentioned in this article. A fundamental reason for the success of the private equity industry is that they take a very hard look at exit before investing in a business. You need also to take time to build your team, both internal staff and external advisors (lawyer, accountant, financial advisor) that will assist you with the transaction.

Think of building and selling a business not as two separate acts, but as part of the same continuum – in the same way that mountain climbers, when planning an expedition, plan not just for the ascent, but also for the descent. A business should be built with exit, or at least succession, in mind.