Exit Planning
Exit Planning: Preparing Your Business for Sale 2-3 Years in Advance
Alex Bulbulian
The most successful business sales are the ones that are planned well in advance. Ideally, you should begin preparing your business for sale 2-3 years before you plan to exit.
Year 1: Foundation
- Clean up your financial records and work with a CPA to ensure accuracy
- Document all operating procedures and systems
- Begin reducing owner dependence by delegating responsibilities
- Address any deferred maintenance or equipment needs
- Resolve any outstanding legal or compliance issues
Year 2: Optimization
- Focus on growing recurring revenue and diversifying your customer base
- Invest in your management team and employee retention
- Optimize your pricing strategy for maximum profitability
- Build out your online presence and reputation
- Secure or extend your lease on favorable terms
Year 3: Preparation
- Engage a business broker for a preliminary valuation
- Make any final improvements to the business
- Begin organizing deal-ready documentation
- Consider timing your exit with market conditions
- Develop a transition plan for key relationships
Common Mistakes to Avoid:
- Waiting too long to start planning
- Neglecting the business during the sale process
- Unrealistic price expectations
- Not maintaining confidentiality
- Failing to plan for life after the sale
Year 1: Foundation
- Clean up your financial records and work with a CPA to ensure accuracy
- Document all operating procedures and systems
- Begin reducing owner dependence by delegating responsibilities
- Address any deferred maintenance or equipment needs
- Resolve any outstanding legal or compliance issues
Year 2: Optimization
- Focus on growing recurring revenue and diversifying your customer base
- Invest in your management team and employee retention
- Optimize your pricing strategy for maximum profitability
- Build out your online presence and reputation
- Secure or extend your lease on favorable terms
Year 3: Preparation
- Engage a business broker for a preliminary valuation
- Make any final improvements to the business
- Begin organizing deal-ready documentation
- Consider timing your exit with market conditions
- Develop a transition plan for key relationships
Common Mistakes to Avoid:
- Waiting too long to start planning
- Neglecting the business during the sale process
- Unrealistic price expectations
- Not maintaining confidentiality
- Failing to plan for life after the sale