How to Start Exit Planning for Your Business

One of the most common misconceptions we see among business owners is that exit planning begins when you are ready to sell your business. In our opinion, exit planning should actually start on the day you begin your business or (at the very least) a year or two before you plan to sell. If it's already less than a couple years away, the next best time to start your exit planning strategy is today.

You do not need to know every detail of how or when you will sell your business. However, having a general vision for your long-term goals gives you a huge advantage when the time comes to transition out of the business.

Why Exit Planning Matters

Many business owners come to us when they are already feeling pressure to sell. Sometimes revenue is declining. Sometimes they are burned out. Sometimes life circumstances have changed.

When that happens, options oftentimes become limited.

When owners start thinking about their exit 12 to 24 months in advance (or even earlier), they have plenty of time to prepare. That preparation almost always makes a meaningful difference in both the value of the business and the overall outcome of the transition.

Planning ahead allows our clients to make decisions strategically instead of reactively. It also allows to get the business as "sellable" as possible so that (usually) multiple offers are brought to the table.

Step 1: Understand Your “Why”

Before we talk about numbers, valuation, or timelines, we always start with one incredibly important question:

Why are you considering an exit?

• Are you ready to retire?

• Do you want to pursue something new?

• Are you feeling burned out?

• Are there personal or family considerations?

Your answer to this question shapes everything that follows.

Two business owners can have very similar companies but completely different exit strategies. Understanding your “why” helps shape our strategy for you, and it also ensures that the decisions you make align with what matters most to you. No two people are the same

Step 2: Think About What Comes Next

This is the question many people don’t expect to answer, but if you ask us, it is one of the most important one:

What are you going to do after you sell your business?

When you’ve spent years building something, it becomes part of your identity. Your daily routine, your purpose, and your energy are all tied into the business.

Without a clear plan for what comes next, it’s easy to feel lost after the sale is complete.

We have seen business owners achieve strong financial outcomes and still feel uncertain afterward because they didn’t think through this part of the process.

Whether it’s retirement, travel, hobbies, starting another venture, or simply taking time to reset, having a vision for your next chapter is critical.

If you don't have a solid answer, and we have seen this happen many, many times, it often leads to an inability to sign at the closing table or a signature that comes with some form of regret.

It's always better to start your exit planning earlier, but absolutely ensure you have an answer for this question that you're passionate about. If you do not have that answer, you are probably not ready to sell.

Step 3: Get a Clear Understanding of Your Business Value

Another area where many business owners are surprised is business valuation.

Unlike real estate or vehicles, there isn’t a simple online tool that can tell you exactly what your business is worth. There are many moving parts like financial performance, industry trends, operational structure, and market demand. That's just the tip of the iceberg, though.

In our experience, most business owners either overestimate or underestimate the value of their business. Their emotions often get tied into it. That's why an emotionless third party is key.

Getting a professional valuation, even if you are not planning to sell immediately, gives you a realistic baseline of what your business is worth. It also helps you identify areas where improvements can increase the value over time.

Step 4: Identify Opportunities to Strengthen Your Business

Once you understand where your business stands today, the next step is looking ahead to the changes you can make over the next few years.

What can be improved between now and the sale?

Improvements often include:

• Strengthening financial reporting

• Reducing owner dependency

• Improving operational systems

• Addressing staffing or process challenges

Even seemingly small changes can have a meaningful impact on how buyers perceive your business and what they are willing to pay for it.

Step 5: Work with an Advisor Early

Every business is different. Even two companies in the same industry can operate in completely different ways. That’s why exit planning and strategy is not a one-size-fits-all process.

Working with an experienced advisor early-on allows you to:

• Identify potential challenges before they become problems

• Understand current market conditions

• Build a strategy tailored to your goals

• Prepare your business in a way that maximizes value

It also gives you a logical, non-emotional sounding board. Someone who understands the business owner mindset can help you think through decisions objectively.

At the end of the day, exit planning is about preparing for a transition financially, operationally, and personally. The more time and intention you put into that process, the better your outcome will be.

When you're ready to start the exit planning process, we are here to help.