Why Exit Planning Matters

I don’t just talk about exit planning. I’ve done it.

Now, there is a new eBook that shows you how to start thinking through your own exit, too.

Over the past year, I have compiled stories from my own experience and from clients I have worked with to create The Intentional Exit: A Strategic Roadmap for Business Owner Exits.

If you are already planning your business exit, or if you need inspiration to get started, this eBook walks through many of the common questions and concerns owners face as they navigate personal, financial, team, customer, and buyer considerations.

In this article, I share a few highlights from The Intentional Exit, starting with one of the most important considerations: your exit readiness.

The Three-Legged Stool of Exit Readiness

A stable business exit depends on three areas of readiness. When all three are strong, you can stand on your plan with confidence.

1. Financial Readiness

Do you have enough personal wealth, independent of the business, to support your post-exit life? What does that life look like? What will you need from retirement savings and business sale proceeds to reach your Freedom Point?

2. Personal Readiness

If the business no longer needs you, what will give structure and meaning to your next chapter? After you clean the garage, play golf, and travel, what will you do with the 40 to 60 hours each week that used to be filled by the business?

3. Business Attractiveness

Is your company transferable, stable, and attractive to buyers?

Your Freedom Point is the moment when your personal finances and business sale proceeds align to support your future lifestyle.

All three legs must rise together. If one leg is weak, the entire exit becomes unstable.

One Owner’s Story

One owner I worked with believed he had a solid business, and he did. But nearly every major customer relationship began and ended with him. His business was owner dependent, which made his exit more difficult and less profitable.

The business was profitable, but it was not transferable.

Over 24 months, we reduced his operational involvement, trained two department leads to own client communication, installed reporting systems, and shifted weekly decisions away from him.

When we updated his valuation, the business’s enterprise value had increased. This was not because revenue changed. It was because business risk decreased.

Reducing owner dependency can positively impact valuation. It also shows why the earlier you begin exit planning, the more options you have to structure the business for future success.

Your Three- to Five-Year Exit Roadmap

In the eBook, I describe exit planning as a sequence rather than a single decision. There are many decisions along the way, and business and life events may require you to adapt.

A 10,000-foot view of your exit roadmap is a good place to start. In The Intentional Exit, I outline how to begin in year one and year two, how to build business value, and how to identify a successor or buyer that matches your risk tolerance and timing. For many owners, that work happens in a three- to five-year window.

Time is one of the biggest risks. Owners often think time is on their side. They may believe they can simply work longer to achieve their plan, but it does not always work that way.

You cannot kick the can down the road forever. Many business owners who wait too long lose value when they sell, or they run out of time to control the outcome of their exit.

Planning now can help you avoid the five D’s that can derail an effective business exit:

• Death
• Disability
• Divorce
• Disaster
• Disagreement

I share examples in the eBook of owner deaths and the impact those situations can have on a business. It is not something anyone wants to think about, but it is a reality. Whether death is sudden or an owner becomes increasingly incapacitated before death, it can leave business decisions to someone else, and not necessarily to the people you would choose.

So what do you say? Download The Intentional Exit eBook and start a conversation with your family, your team, and your advisors about what an intentional exit could look like for you. Decide now what you want to do with your 8,000 days of retirement.

After all, it has always been your business and your life. Take charge of what comes next.