Topics Addressed by a Fully Developed Exit Plan

Define the Goal

If you don’t have a clear idea of where you want to end up, it makes it much more difficult to get there. Your succession plan should include financial goals, operational goals, personal and business values goals, and other goals that capture the results that are most important to you.

Engineer a Financial Plan

Your succession plan should have a clear strategy and a definite process for funding necessary expenses and paying you the amount you want for your business.

Document an Estate Plan

For most small business owners, their business is their most significant asset. When you sell your business, you suddenly find yourself with a level of liquidity you have never seen before. It is important to have a plan in place for managing those funds both for your benefit while you live and for the beneficiaries of your estate.

Tax Planning

Whether you are worried about income tax, estate tax, gift tax, or some other tax, your succession plan must address the various tax issues involved in a business sale.

Risk Management

We don’t know what tomorrow may bring, but we can be prepared for what might happen. An effective succession plan will address various types of risk and plan for how to manage those risks.

Operational Opportunities

An effective succession plan will consider potential opportunities available to your business. For example, a factor that can enhance the value of your business for a potential buyer may be an opportunity for expansion or merger that you are not interested in pursuing but a new owner find appealing.

Organizational Improvement

Another value driver for a business are internal improvements that enhance efficiency and increase margins. An effective succession plan will identify and address areas of organizational improvement that should either be implemented pre-sale or explained in the presentation as part of the sale.

Legal Counsel

There are multiple legal issues involved in the sale of a business. Everything from real estate transactions to contracts to assessing tort liability exposure requires the analysis and advice of an attorney who understands small business.

Measuring Progress

An effective succession plan will also lay out milestones and other metrics to measure progress. Remember that your succession plan will only work if you actually implement it. Having predetermined checkpoints and milestone to help you measure your progress is essential.


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