A successful exit is usually built years before the owner is ready to leave.
Exit planning is not only for owners who are ready to sell. It is the process of preparing the business, the owner,
and the transaction options so that a future transition can happen from a position of strength rather than
urgency.
DEFINE WHAT EXIT MEANS TO YOU
Selling to an outside buyer is only one option. You may transfer the business to family, sell to employees or
management, bring in a partner, retain the property, gradually step away, or eventually close. Your personal financial goals, desired timeline, family considerations, and willingness to remain involved should
shape the plan.
SBH EXIT NOTE: Start with the life you want after the business, not only the transaction.
REDUCE OWNER DEPENDENCE
A business that cannot function without the owner can be difficult to transfer. Document processes, develop
leadership, clarify responsibilities, and move important relationships and information into the organization rather
than keeping them solely with you.
SBH EXIT NOTE: A transferable business is one that can continue operating after ownership changes.
STRENGTHEN FINANCIAL PERFORMANCE AND RECORDS
Clean financials, understandable cash flow, reasonable margins, and documented adjustments help a future
buyer or advisor evaluate the company. Do not wait until due diligence to organize years of records. Preparation is easier when it becomes part of normal business management.
SBH EXIT NOTE: Exit readiness and good financial management reinforce each other.
IDENTIFY AND ADDRESS RISKS EARLY
Review customer concentration, vendor dependence, key employees, leases, debt, legal matters, licenses,
contracts, insurance, equipment needs, and ownership of important assets. Problems discovered during a transaction can delay it, change the price, or change whether it happens at all.
SBH EXIT NOTE: The best time to resolve a transaction problem is before there is a transaction.
UNDERSTAND YOUR BUSINESS AND PROPERTY OPTIONS
If you own the real estate, decide whether your ideal exit includes selling it, retaining it and becoming the
landlord, or structuring the business and property separately. The right choice depends on income needs, taxes, financing, market conditions, and your long-term goals
SBH EXIT NOTE: The business and the building can have different exit strategies.
BUILD A TEAM BEFORE YOU NEED IT
Attorneys, CPAs, valuation professionals, financial advisors, lenders, brokers, and other specialists may each
play a role depending on the transaction. Knowing who you will call before a deal is underway can make the process more organized and reduce rushed decisions.
SBH EXIT NOTE: Exit planning is multidisciplinary.
GIVE YOURSELF TIME
Time gives you the ability to improve earnings, correct weak systems, develop managers, renegotiate contracts,
reduce concentration, and consider multiple buyers or structures. An owner forced to exit quickly may have fewer choices than an owner who prepared early.
SBH EXIT NOTE: Time is one of the most valuable assets in an exit plan.
EXIT PLANNING IS REALLY CHOICE PLANNING
A thoughtful exit plan gives you more control over when you leave, how you leave, and what the business looks
like when you do. You do not need a sale date to begin preparing. This article is for general business-planning purposes and is not legal, tax, appraisal, or investment advice.
