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3 Essential Questions A Business Owner Must Ask To Start Exit Planning

By Kyle Danner

Approximately 1/3 of business owners surveyed plan to exit their business in the next 5 years. However, only 20% have written and shared their plan. That difference is alarming since most business transitions take a minimum of 3 years while some may take 5 years or more.

If you’re thinking of exiting your business in the near future, start by asking yourself these three questions:

1. What do you want to do? 

2. How much will it cost? 

3. How will the business pay for it?

What do you want to do?

Think of this as the vision piece, or how you want to spend your days. This is not a time to offer vague answers like volunteer, work on your golf game or spend time with the grandkids. You must be specific.

After going to work every day for 30 or 40 years, is it realistic that you’ll be satisfied slowing down, even if that’s what everyone else expects you to do? Start with how you’ll answer the question, “So what do you do?”. Then, spend some time working on your Ideal Life. Once you have a clearer picture, ask yourself this next question...


How much will it cost?

A qualified wealth manager experienced in working with business owners can help. Aside from the general costs of living, healthcare is likely to be your biggest expense.

And there are others to consider too.

  • Will you want to pay for weddings, annual family vacations, or education for your kids or grandkids?

  • Will you want to help your kids with purchasing a new home?

  • Or will you want a second home for yourself that will be shared with the family?

Of course, the next question is...

How will the business pay for it?

It’s estimated that 70-90% of an owner’s wealth is tied up in their business. Extracting that wealth is complicated and it may not all happen at once when the business is sold.

The owner may have to finance part of the deal if passing the business to family, or the buyers may have to make installments. Owners should have a business valuation done to fully understand how much their business is worth. That valuation must be shared with their wealth manager to be sure the sale will fully pay for their retirement.

The mistake owners make

When business owners think about exiting their business, they focus too much on the after-tax dollar. They think, “I’ll worry about what I’ll do after the sale.”

That’s a problem because the quality and the comfort of the owner’s life is dependent on what their plans are and how much they’ll cost. Imagine the disappointment of selling your business thinking you’ll spend your days traveling the world only to learn the sale doesn’t come close to paying for everything.

If you’re an owner putting off your exit plan, you’re not alone. About ½ of all owners surveyed haven’t done any planning at all. That’s easy to understand because it feels overwhelming. Take the first step and answer the three questions. Then you’ll have a much clearer idea on what’s next for you, your family, and your business.

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