When is the Right Time to Start Planning Your Exit?

Most business owners don’t think about exiting their business until they have to. In fact, research shows that only 20-30% of small business owners have a detailed exit plan in place. This lack of planning contributes to some staggering statistics: only 30% of small businesses successfully transition to a second generation, and while another 30% are sold, a whopping 70% simply close their doors.

So, when should you start planning your exit? The answer might be sooner than you think.

Start with the End in Mind

The best time to plan your exit is when you’re developing your business. Starting with the end in mind allows you to structure your business for a seamless transition when the time comes. Whether you plan to sell, pass the business to the next generation, or take another route, early planning puts you in control of your future.

When Passion Starts to Fade

As a business owner, your energy and enthusiasm drive the company forward. If you find yourself dreading work, feeling burnt out, or struggling to stay motivated, it may be time to consider an exit strategy. Your team relies on you for direction and inspiration—if you’re no longer excited, it could be the right moment to start planning your next move.

Before You Have to Sell

The worst time to sell is when you’re forced to due to circumstances like divorce, illness, partnership disputes, or financial distress. If you wait until you need to exit, you may not have the time or resources to ensure a smooth and profitable transition. Planning ahead ensures you’re prepared for any scenario.

2 to 5 Years Before Your Target Exit Date

A successful business exit requires careful preparation. Ideally, you should start planning at least 2 to 5 years in advance to optimize your business’s value, get financials in order, and ensure a smooth transition.

Lessons from Experience

When we were first approached by a buyer, we weren’t prepared. We didn’t have a firm grasp on our numbers, the value of our merchandise and assets, or the goodwill associated with our business. We also weren’t sure if we actually wanted to sell. This led to a two-year journey to get our business in order, assess our options, and clarify our goals. The experience reinforced the importance of exit planning long before you think you’ll need it.

An exit plan isn’t just about selling, it’s about ensuring your business and personal interests are protected. You have worked hard to have a thriving business in your community. You deserve to enjoy the fruits of your labor and preparing can help you do that.

Ready to Take the Next Step?

If you’re considering exiting your business in the next 2-5 years, now is the time to start planning. We’d love to help you explore your options and develop a strategy for a smooth and profitable transition.

Schedule a free 30-minute consultation today and take the first step toward a well-planned exit and a successful future.

When Should I Plan My Exit?