Is a multi-billion dollar business failure truly a wake-up call for your company? Spirit Airlines has officially crashed and burned, filing for bankruptcy and closing its doors, leaving passengers stranded and investors penniless. While the story of a major airline’s demise is shocking, for business owners everywhere, it’s a critical lesson in survival. Spirit didn’t fail overnight. Their collapse was a slow-motion catastrophe rooted in fundamental mistakes: building on price alone, operating without a financial buffer, ignoring their damaged brand, and lacking a ‘pivot lane’ when the market shifted. In this post, we dive into the top four reasons for Spirit’s failure and show you how to build the unshakable foundation—based on the ‘6 Ps’—that Spirit Airlines completely missed. Learn how to define your exit strategy from day one so you don’t just sell your business, you exit rich.

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The Crash And Burn Of Spirit Airlines

You know me. You’ve listened to me. You’ve listened to me for years. I’ve been in the mergers and acquisitions industry for many years. You all know I specialize in buying, fixing, and selling and growing companies. That’s my passion. That’s what I do. My last book was called Exit Rich endorsed by Steve Forbes and is a Wall Street Journal and USA Today bestseller.

In our last episode, we discussed timing, value market trends and the GPS exit model. The Seiler Tucker GPS exit model. In this episode, we’ll see how the 6 Ps found in my book Exit Rich can be used to determine your trajectory and exiting rich. As you may have already heard, Spirit filed for bankruptcy yet again. They did fall back in 2024. This time, Spirit Airlines have closed their doors. Spirit Airlines has crashed.

A big huge crash leaving passengers stranded. Leaving investors penniless. Think about this. You might say, “Michelle, that’s all great news. There is a billion-dollar airline. What would this have to do with me and my business?” My answer is everything. What do you think it has to do with you? You’re a business owner. It’s a business owner problem. If you’re a Baby Boomer who has been building your company for decades, this conversation is especially for you.

The Cheapest Option / No Raving Fans

What happens to Spirit is exactly what happens to business owners who don’t plan their exit from the very beginning and who don’t build a solid foundation on what I call the 6 Ps, that were about to dive into. What happened to Spirit Airlines? Spirit didn’t fail overnight. They fall slowly just like most businesses do, then all that once, they crash. Why? Let’s dive into the top four reasons. Number one, cheapest option. They’re the cheapest option out there. People book Spirit because of price and price only. They build their entire company on being the cheapest option.

Being affordable is valuable but there should be more factors to your service and company than just price in order to increase loyalty. You have to have more than just price. Spirit had passengers, but guess what? They didn’t have raving fans. People like me that flew Spirit had said, “I hate Spirit. It’s my only choice now. There’s no other option. They’re the cheapest.” People are questioning it, “Is the plane going to get their own time? Is it going to break down? Will my bags fit in the overhead? Will the plane crash?” Everybody asks those questions. You have more objections than you have raving fans. When you don’t have raving fans in your business, your business is going to die. It’s going to fail.

Number two, they don’t know the buffer. Spirit operated on razor thin margins. One external shock and there was nothing to absorb it. If you operate on just price but you have no other things in your business. No other things that can absorb it like raving fans or extra benefits you get flying Spirit. Extra leg room, free bags or things like that, then you are going to end up going out of business because they have no other external factors that absorb the price issue.

Their business would belt on price and price alone. Early founders do this all the time. They’re project revenue, skip the reserve and spend like the good month is their baseline. I have this business owner say, “I had a good six months. I went out and bought a new car. I bought a new home.” Guess what? Your business will fail. You can’t base your business on 1 or 2 or 3 good months. You must build a buffer before you think you need one.

I would say the minimum is one to two years. People say, “I just need 90 days.” Wrong. Incorrect. Remember COVID? People went out of business because they didn’t have enough reserves. They didn’t have enough working capital. They have 90-120 days. You need 1 to 2 to 3 years. You have your bank account. You should have a savings account. You need working capital. Every industry is different as far as how much working capital that they need. You need to know your operating one way at all times.

Number three, they ignored the brand signal. Spirit reputation was a punchline for years, meaning people made fun of Spirit. It’s like, “You got to fly Spirit. I will pray for you if you fly Spirit. I cannot believe you have to fly Spirit.” It was a punchline. It was the joke of the airline industry for years. Leadership struggles with it. They knew of it. They were aware of it, but they didn’t do anything to fix it. They had a problem. They knew they had no loyal clients. No loyalty and customers.

They know they had no raving fans whatsoever, but they didn’t do anything to fix it because they were still filling seats. It’s a huge problem. Here’s the biggest problem with reputation. It compounds whether it’s good reputation or bad reputation. They had the worst reputation of all other airlines. By the time Spirit was trying to fix the customer experience, the brand was damaged. It was beyond repair. You have to pay attention to all these different aspects in your company.

Your brand is not your logo. It’s not your company name. It is what your founders, customers, and investors say about you when you are not in the room, my friends. Protect it. Protect it early on. If you see something that’s different and if you see your brands starting to diminish, fix it. Fix it early on because many times, it’s too late. You have to pay attention to the warning signs.

Number four, there was no pivot lane. Literally no pivot lane in the sky or whatsoever. The sky or on the land, they had no pivot line. When the market shifted, Spirit had no alternative model to move towards. No premium tear. No revenue that was not tied directly to passenger volume. No flexibility or whatsoever. It started to survive disruption or build optionality into their model from day one. You do not need five business models. You need one that works and at least one lever that you can pull off the core when it starts to break.

Here’s the bottom line with Spirit. They stopped when I say most business owners stopped doing, which is a lack of aim. Aim is one of the most important things in business. Always innovate in the market. If you don’t innovate in the market, then you’re dying. You’re either dying or thriving in business. There’s no in between. Lack of aim. You’ll find yourself in the same position as Spirit Airlines did. They had no real differentiation. Nothing separated them from everybody else except for price.

They have zero margins for error. When the market shifted, fuel cost increased, competitors caught up and customers wanted better experiences. They had nothing to fall back on except for price. Price with them margins. No flexibility. No premium positioning and no real leverage. They weren’t a strong business. They weren’t a strong company. They didn’t have a strong foundation. They didn’t prepare their company to exit.

They didn’t have a plan. There was only a pricing strategy built on one thing. Price and price alone. When that broke and customers demanded more, everything else broke in the business. Why does this matter to you? As I said in the beginning, this matters to all business owners no matter the size. You should learn from your competitors. You should learn outside of your competition. You should learn strings and failures from the marketplace.

The 6 P’s

Now, let’s bring this back to you. I work with business owners every single day. Many of you have been in business for 20 years, 30 years, and 40 years. Some of you are startups and just getting started. This message is for you as well and it’s very important to pay attention to. You feel something incredible but there’s a big problem. Most of you are running your business without a clear exit strategy. Without building a clear solid foundation and not operating your business on just price alone. You’re working hard growing revenue managing people but you haven’t defined where you’re going.

When you don’t define your destination, you drift just like Spirit did. This is the hard truth, folks. This is a wake-up call. Spirit is a wake-up call for us. Let’s dive into the GPS exit model that you’ve heard me talk about before. In my book Exit Rich, I taught you the X model. This is the biggest mistake that Spirit made. Building a business without an exit plan is like driving without a destination. Your GPS requires three things. Number one, you need to know your destination.

Spirit should have had a destination. I’m going to sell this business. I’m public and we’re going to sell in twenty years. We’re going to sell this number. Let’s say it’s $5 billion or $100 billion. What is Spirit worth now? Spirit never had a destination. Spirit knew what they were worth but they never had a drive to plan their exit. If they did, they wouldn’t have built their business on price and price alone. You need to think about your business and ask yourself, what do you want to sell your business for?

You should start from the beginning. Stephen Covey says, “Start with the end in mind.” All startups should be doing this. All business owners should be doing this now. What do you want to sell your business for? Do you want to sell it for $20 million? What you want to sell your business for is not what you hope. Not what your friends sold your business. It’s not what your attorney or CPA says what it’s worth. In most cases, your friends, your attorneys and your CPAs have no clue what your business is worth.

Buyers don’t care what you need to retire on. Buyers don’t care about the next phase of your life. What are your actual financial goals? What do you want to sell your company for? Figure that out first. No matter what stage of your company you are at. Number two, what’s your current location? Where are you starting from? What is your business worth now? GPS doesn’t know where you’re going if it doesn’t know where you’re starting from. Most owners don’t know this.

They take a guess or they wait until a catastrophic event has occurred. They say, “I need to sell my business. I need to sell it for $20 million because that’s what I need to afford my lifestyle.” Guess what? Buyers don’t care. Buyers don’t pay on guesses. They don’t pay for your retirement. They don’t pay what you think you need. They pay based on facts. They base upon what the business is really worth.

Number three, know your time frame. When do you want to exit? If you want to exit in three years, the time is to get started now. Ask yourself, 3 years, 5 years, or 10 years. If you want to sell your business in three years, you need to start now. If you want to sell them in five years, build that solid foundation because timing impacts everything evaluation, buyers and market conditions.

Let’s think about this. We’re Spirit wrong in many places. Let’s look at the Spirit through the lens of the GPS exit model and the Seiler Tucker 6 Ps. They had no real destination beyond growth and being cheap. Their destination was to grow and be the cheapest airline that they can possibly be. They didn’t build towards a sellable, scalable and sustainable model. No flexibility or whatsoever. In fact, they didn’t have a strategy. Most importantly, they didn’t build business buyers that would pay a premium price for. The government will not bail them out. Private equity is not interested.

This is why they crashed. When disruption hit, they couldn’t pivot. That’s not just an airline issue. That’s an exit failure issue for all businesses. This is why this message is so important for you. It’s a wake-up call. Now, it’s one thing to plan your GPS exit model. You should know when you start your business, what you want to sell your company for. I know it sounds crazy, but you should know that and work towards that goal. It doesn’t matter where you are now in your business. Whether you’re 5 years in, 10 years in or 20 years or 40 years in.

You need to plan that exit then you need to look at your business and say, “Have I built a solid foundation? Have I solid company that buyers will want to buy and pay me premium dollar for so I too can exit rich? Most business owners don’t think about their GPS exit and don’t plan their business on the 6 Ps. They don’t build a sellable, sustainable company. Now, let’s talk about what builds a sustainable, scalable, sellable and business.

If it’s not sustainable and scalable, nobody’s buying it. In my book Exit Rich, we use what I call the 6 Ps because buyers don’t just look at revenue. They don’t look at EBITDA. They look at synergies, what’s strategic and what can catapult their business to the very next level. That’s what they look at. They look at structure, sustainability and low risk. They don’t want to buy a company that’s high risk. That’s why Spirit ended up in the ditch because they had huge risk.

Nobody wanted to bail them out. In order to create a solid foundation, it starts with people. If you don’t have people, you have a glorified job. Do you go to work every day versus a job that works for you? You need strong leadership. You need a business that can run with you, the owner. Most business owners don’t have that. They have a glorified job. You need to build a team. You need to have leaders in place. You need a business that can run completely without you and then product.

What is the product? Is it in demand? Is it on the way up or is that on the way out? Think about Blockbuster. Blockbuster was a huge company. They built this demand, but they did not have aim. They did not always walk in and always innovate. They did things the same old way when the internet came. People can stream everything that they want to. Blockbuster failed. Spirit is in a demand industry. It’s an airline. You want to build a product that is in demand, on the way up and not the way out. You want to build recurring revenue. You want to have that mailbox money.

Processes. You’ve got to build a business that has processes, with systems and SOPs. Your employees shouldn’t run the company. Your processes should. You need those processes in place. Now, Spirit didn’t go wrong with people. They had great people. They had great teams. They have poor leadership and poor management. They took them all the way down, crashed and burned. Do they have processes? Yes, they have processes.

Now, let’s look at proprietary. Proprietary is your number one value driver. This is where Spirit failed miserably, proprietary and their brand. You have to look at your proprietary, ask yourself, “What are my proprietary assets?” Proprietary can take you from a 3 multiple to a 5 multiple to a 10 multiple. What’s your proprietary assets? Proprietary assets are branding. Did Spirit have any branding? Absolutely not. They were branded for the cheap airline, that’s unreliable and dysfunctional. No amenities or whatsoever. You have to pay for everything in addition to your price of the ticket.

A lot of times, when you looked at the price of the ticket, by the time you added everything to it, they were more expensive than other airlines, believe it or not. They’re a horrible brand. You got to look at, what is your competitive advantage? You have to have more than one competitive advantage. They have one. Their competitive advantage was price. They didn’t have any other competitive advantages whatsoever. You have to go back to proprietary and say, “What’s my brand? What’s my brand reputation? How long have I been in business? Do I have any transferable contracts? Do I have any patents? Do I have a trademark? Do I have federal trademarks?”

What are your proprietary assets? Build upon that. Spirit had nothing proprietary or whatsoever. That’s why they crashed and burned. Patience. Patience is your client base. Most businesses follow the 80/20 rule. Where 80% of their revenue comes from 20% of their clients. That’s called client concentration and that is the kiss of death, too. It’s not client diversification. You need client’s diversification. You need loyal patrons that will come back to you again and again.

Spirit has zero loyalty with their client base. Their customers didn’t like them. In fact, they hated them and they just went because it was the only option for price. You build a business like Spirit did, plan to fail. Plan to crash and burn. Now, profits are never ever the problem in your company. Everybody’s like, “Michelle, I have no profits. I can’t make any money. That’s not your problem. Profit is never your problem. It’s the symptom of not following the other five Ps.

If you don’t have the right people in place, the right team, the right leadership. You’re going to lose profits. If you’re a product or service or industry is on the way out and on the way up like a Blockbuster or Toys R Us. You’re going to lose market share. It’s going to crash and burn. If your process is not buttoned up and not tight, you’re going to have leakage. Your overhead is going to be too high. If you have zero proprietary assets, then you have to fight for your federal trademark name or nothing sets you apart from your competition.

Nothing that makes you unique. You’re going to end up going out of business. If you have customer concentration and not customer diversification, you’re going to go out of business. Profits are a symptom of not having a solid foundation on the other 5Ps. It’s extremely important. Profits are healthy growing margins. Spirit lacked several of these and I see the same thing and privately held businesses every single day. Remember, I’ve been doing this for many years, especially owner dependent businesses.

If your business cannot run without you, you don’t have a sellable asset. You have a glorified job. Sorry to say that. I’m not trying to hurt anybody’s feelings, but it’s the truth. The facts are the facts. Eight out of then businesses will never sell because business owners do not build a sustainable, scalable and sellable business, unfortunately. That’s the biggest mistake the Baby Boomers make. The number one mistake I see them all make over and over again is owners wait too long to sell their business.

they don’t build their company on a seller foundation. They don’t have the right people. They’re in a dying industry. They stop innovating their marketing. They don’t have the processes button. They have zero proprietary assets. Customer concentration is losing money and they never have a plan to exit. They never build that business that somebody wants to buy and pay them top dollar.

Owners wait too long to sell and they wait too long to build a sellable business. Most business owners always say, “I’ll sell when I’m ready.” That’s the worst thing you should ever say. The market has to be ready, too. There is a market timing on when you should sell your business. When you wake up one day and say, “I’m ready to sell my business. A catastrophic event has occurred or I’m burned out. I want to retire. I can’t take it anymore. I’m getting divorced.”

It’s too late because you probably never bought a sellable business in the first place. Why are you waiting? The market has shifted. Competition has increased significantly. Technology has evolved. AI has changed the way we do business now. Buyer demand changes suddenly. Your time is gone, my friends. It’s out the window. You’ll be part of the statistics of why 8 out of 10 businesses don’t sell. You don’t want to be the top eight that don’t sell. You want to be in the top two. You want to be in those two businesses that will sell.

What You Should Do Differently

You won’t be if you don’t build a solid foundation. Your leverage is gone. If you don’t create that foundation and evaluation drops significantly. What should you do? Let’s think about that because I’ve told you what to do and what not to do. What should you do differently? Ask yourself that question. Think about that. Number one, get a real evaluation. Your business is the biggest asset. Your biggest valuable asset is your business, but you don’t get an evaluation every year.

You don’t know where you stand. You don’t know what your business is worth because what you think it’s worth is probably not worth what you think it is. It could be worth more. It could be walking a lot less than what you think it is. Market drives value. Market trends drive value. Competition decreases value. Get a real valuation now. Not when you’re ready to sell.

Knowing how to increase the value of your business based upon that solid foundation of the 6 Ps will keep you on the right track to selling. When the business and the market is timed correctly, creating a bidding war where we can bring multiple buyers to the table. That’s what you need to do. Fasten your reputation early on. No one needs to be done in your company to continue to succeed.

Number two, start building your business, as I said using 6 Ps and that solid foundation. On the 6 Ps, Spirit operated on none. They have zero 6 Ps working for them. Except for maybe people and processes. Let me go back and say Spirit probably operated on 4 of the 6 Ps, which was people and processes. They fell on every other P. Especially proprietary assets. Turn your business into a well all machine that runs without you by building a solid foundation that we talked about in Exit Rich.

Number three, define your GPS. Know your numbers and timeline. Know what your gaps are between what you want to sell your business for and what your business is worth now. Know how to fix those synergies and how to operate in all 6 Ps. Number four, build optionality into your business. Have options. One revenue stream. One strategy because flexibility creates value. Sometimes I say, “Business owners can’t handle the truth,” but here’s the truth.

First, they did not plan their exit. They did not build a solid foundation on the 6 Ps. They reacted to the market and lost total control. When you lose control, you’re dead. I always say, “He who owes control makes the rules.” They reacted to the market and reacted too late, they totally lost control. You don’t want to do that in your business. You spent decades building your company. This is your legacy, retirement and your financial future.

Tell me if it’s a chance. Plan it. Build it. Engineer it. Premium exits are not accidental. They are designed from the beginning, my friends. When you do it right and do it well, you don’t just sell your business. You exit rich. Thank you for tuning in to this episode. Please share it with your friends, colleagues, and your inner circle.

Important Links

• Michelle Seiler Tucker
• Michelle Seiler Tucker on LinkedIn
• Exit Rich: The 6 P Method to Sell Your Business for Huge Profit