Though you’re still years (maybe even a decade or so) from retirement, it’s important to acknowledge that someday, your business will need to operate without you. Business exit planning is an important component of owning a business, yet it often falls on the backburner until owners are just about ready to sell.
But when you know retirement is coming eventually, there are decisions and considerations you can make now to set yourself up for a more successful (and financially lucrative) transition in the future.
Now that you’re operating a successful, well-established business, let’s talk through four questions to ask yourself when it comes to selling and exiting the business. And feel free to download our helpful guide: What Issues Should I Consider When Planning for the Sale, Disposition, or Succession of my Business?
Why Is Exit Planning Important?
As a business owner, you’re likely leading the charge every day—you probably feel pulled in a million directions, too.
Even if you’re no longer involved in day-to-day operations or customer-facing roles, you’re still working 40+ hours a week making strategic, forward-focused decisions. Your life and business are interwoven, and someday, you’ll have to untangle them.
When business is accelerating a mile a minute, it can be hard to see the forest for the trees. But you owe it to yourself, your family, and your business to take a step back and consider the bigger picture.
Right now, you have an advantage: time. You can use the coming years to build and execute a long-term transition plan that helps ensure your customers or clients, as well as your team members and eventual successor, are well cared for during and after the transition.
As you develop your business exit strategy, your financial well-being needs to be prioritized as well. Business owners can be at a disadvantage when it comes to preparing for retirement (or whatever their next chapter may be). Their financial life is tied directly into the business, and they may lack savings or other financial resources (like a traditional 401(k)). Your business is likely your biggest asset, and you owe it to your future self to create a comprehensive and thoughtful transition plan.
What Is My Business Worth?
Every business owner should know roughly what their business is worth—and not just when they’re getting ready to sell. Understanding your business’s value is important for evaluating insurance needs, acquiring additional lines of credit or capital, entertaining investor offers, and more.
The closer you get to exiting the business, the more important it will be to get an accurate and up-to-date understanding of your business’s worth—especially if you plan on selling to someone (like your employees, a family member, or an outside buyer).
There are several business valuation methods to choose from, and you may want to work with a professional to decide which best aligns with your specific business model and needs.
The three most common business valuation models include:
Asset model: The simplest of the three, this model simply calculates the difference between a business’s assets and its liabilities (debts).
Income model: This uses a variety of factors and calculations, but the income model is designed to put a present-day valuation on the business based on future expected earnings.
Market model: With the market model, you determine the value of your business based on what other similar businesses have recently sold for in your area. This is based on the seller’s discretionary earnings (SDE), which is the profit from the business plus the owner’s salary or other living expenses (like insurance premiums and retirement contributions). For example, if other similar businesses are selling for an average of 2.5x the SDE, you can use your own earnings numbers to estimate what your business may be worth.
Keep in mind that with any of the models above, you may be able to conduct a rough estimate on your own by using an online calculator or program. But for the most accurate valuations, you’ll likely want to work with a professional.
Obtaining an accurate valuation will become even more critical as you approach retirement and prepare to sell, especially if you plan on funding retirement with the proceeds from the sale of your business.
Is the Business’s Identity Too Closely Tied to My Own?
Years ago, you may not have thought twice about opening a business with close ties to your name, reputation, or image. Maybe you’ve been operating under the name “Jim’s Accounting” or used your headshot in advertisements—people like seeing who they’ll be working with, after all.
For as long as you’ve been an active owner of your business, this has never been an issue. But when it comes time to think about your eventual exit, you have some important considerations to make. How can your business maintain its reputation and customer base while separating its identity from your own?
Enabling your business to take on its own brand identity is also important for attracting outside buyers. Other companies won’t want to acquire a business if they believe the majority of customers will leave once the owner does.
With enough time between now and retirement, you may want to start gradually shifting your business’s branding and identity to something new. During this process, consider how your business will maintain its existing reputation as you remove yourself from the “spotlight,” so to speak.
Using our earlier example, maybe instead of “Jim’s Accounting,” incorporate your future successor’s initials and change it to something like “J&M Accounting.”
Introduce clients and customers to other team members, and assure them that your team is well-trained and capable of handling their needs. Help them get used to working with others in the business while you’re still there to smooth out any wrinkles and ease customer concerns.
How Involved Do I Want to Be After Leaving the Business?
When the time does come to hand over the reigns to your successor, would you like to be able to walk away for good? Or do you envision maintaining some oversight, perhaps as a board member, consultant, or ambassador? This can be both a financial and emotional decision to make, especially if you’re given the opportunity to continue earning an income into retirement.
Similarly, you’ll want to consider if there’s an opportunity (or desire) to maintain ownership over existing property or assets, like a storefront or warehouse. It’s not unheard of for business owners to sell the business, keep the physical property, and rent it out to the new owners for some passive income in retirement. Keep in mind, if you choose to maintain some ownership, it will impact the sale price of the business and potentially limit your buyer pool.
Thinking About Your Eventual Exit Plan? We Can Help
At Wingate Wealth Advisors, we work closely with business owners to make sure their exit strategy is more than just a financial transaction—it’s a well-orchestrated plan that supports your long-term goals, values, and lifestyle. From helping you understand the true value of your business to modeling the after-tax proceeds of a sale, we provide clarity at every step.
Our team collaborates with your accountant, attorney, and business broker to ensure your exit plan is tax-efficient, legally sound, and aligned with your broader financial picture. We help you evaluate sale options—whether you’re transferring ownership to family, selling to employees, or exploring offers from outside buyers—and develop a personalized investment strategy to replace your business income and support your retirement or next chapter.
Your business exit could be one of the largest financial events of your life. With thoughtful planning and the right guidance, you can turn years of hard work into lasting financial security.
Let’s talk about where you are now and what comes next—schedule a complimentary consultation with our team today.
