Scott Snider is the President of Exit Planning Institute, the authority on Exit Planning education.
You’ve given years to your business. You’re tired of the daily grind—or bored and want a new challenge. You’ve been talking about exiting your business for a while. Yet, the talk hasn’t gone anywhere.
The reasons are endless: You’re too busy. The company is too young to focus on exiting. Maybe you think you’re too young—you’ve got time. Perhaps you’re avoiding it because you know your business partners won’t agree. Or you simply just don’t know how to start or who is qualified to help you.
While these may be valid reasons, it’s equally likely they are excuses, and you’re sabotaging your exit.
In my experience as president of a company that specializes in exit planning, I’ve found business owners typically delay an exit for one of three reasons: personal, financial or business.
Personal: Passion And Purpose Outside Of The Business
Many owners mask a hesitation to exit under the guise of money concerns—too low of a sales price being offered, not enough saved, inadequate retirement planning, etc. While money is certainly a primary concern, when owners are impeding the exit, I’ve learned it’s rarely about money.
What’s more likely is that owners don’t know how to let go. After investing years of hard work, dedication and personal resources, the business becomes an integral part of your identity. Your entire sense of belonging is tied to the business. Your name may even be on the business. With such a deep emotional connection to the company, you may see the business as an extension of yourself—whether you even realize it.
Exiting a business can evoke feelings of fear and uncertainty, making it difficult to consider selling or exiting, even when it might be financially beneficial or necessary. By overcoming these psychological barriers, you can break free from decision paralysis and experience personal growth.
What owners should do: Before an exit, commit as much time and planning to your personal life—and your next act, whatever that looks like—as you would a business plan. Think about what brings you peace, what gives you energy and how you want to contribute to this next phase. Then, develop an action plan around it.
Financial: Freedom To Live Your Desired Post-Exit Life
In my company’s work, we’ve found that the average small-business owner often has most of their wealth tied up in their business and expects the sale of that business to fund the bulk of their retirement. However, this financial dependence can create pressure, anxiety and uncertainty about exiting, which can lead to hesitation and further delays. This is especially true for small-business owners who find that the company’s value is not enough to support their financial needs after exit.
Oftentimes, you need a plan to close the wealth gap—the difference between current wealth and the amount of wealth needed to live your desired post-exit life. The only certain and sustainable way to close that gap is by driving significant value, multiplying how much a business is worth to a potential buyer. And that starts with the end in mind: Good exit planning is good value creation, which is good business.
What owners should do: Shift from an income mindset to a value-creation mindset. That starts with an accurate business valuation that tells you what your company is worth, what it could be worth if it were best-in-class and how those numbers compare to your post-exit personal and financial plans. If you’re thinking of working with an advisor to help you with this, ensure they’re trained in exiting a business successfully, can offer objective guidance and will help address emotional challenges.
Business: Value That Lives On Beyond Your Exit
Some owners mistakenly believe exit planning is a short-term process, only to discover they are inadequately prepared. There might be unrealistic expectations about the business’ worth, which is why a proper valuation should be done at the start of the exit-planning process. Additionally, the business may still be too dependent on the owner’s involvement due to insufficient leadership training, a lack of documented processes and systems or other operational challenges that complicate the transfer of ownership.
Preparing for your exit starts with developing a value-creator mindset, not just as a business owner but as part of the company culture. And remember that this can take time. At my company, it took us four years to train the entire organization to operate as value creators and embed it into the culture of how we do business. Now, collectively, my team is constantly seeking ways to improve or create solutions that address business and customer needs. Bonus: As team dynamics shift from an individual-oriented approach to a team-oriented one, teams develop trust and become high-performing—the sweet spot for value creation.
What owners should do: Build an advisory team that can help you build a business plan. (Remember to ensure your advisory team spends time on your personal financial plans, too.) There are four advisors I recommend having on your team, and they need to operate cohesively as a team to help you reach your goal. Your exit-planning team should include an attorney, a certified public accountant, a growth advisor or coach and a financial planner. And, again, ensure at least one of your team members is experienced in exit planning. Finally, remember that the more value you want to build, the earlier you’ll want to begin with the end in mind.
Exit planning is a complex journey that requires careful consideration of personal, financial and business factors. By acknowledging your emotional connection to your business, focusing on value creation and building a sustainable organization, you can pave the way for a profitable exit. Remember, the time to start planning your exit is now. Your life after business is waiting.
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