When is the best time for business owners to start thinking about their exit strategy? While the answer to that question may vary based on factors such as length of time in business, revenues and other key assets, age of the owner, and market conditions, most small business owners delay starting this process much too long. In fact, a strong case can be made that the sooner business owners start thinking about and planning for their exit, the better.

The first month or two of a new year is a great time to start the succession planning process, even if you plan to continue running and growing your business well into the future. The sooner you start this process, the more strategic you can be about designing a strategy that will work best for you and your business when the time comes to exit. Here are a few tips to consider as you begin to think about your succession plan.


  • Begin the “pre-planning” process as early as possible, but at least 3-5 years BEFORE your target date to transition out of your business.
  • Envision your life after exiting your business. What are your plans and how much money will you need to do the things you really want to do, and have the lifestyle you want after exit?
  • Consider having a valuation of your firm done by an outside expert. Even though a valuation is only a “snapshot in time” due to marketplace fluctuations, it could nevertheless give you a benchmark to work from once you get closer to your exit date.
  •  Work with a wealth management professional to create an estate plan designed to protect your assets by minimizing your estate taxes and maximizing the wealth that you can pass on to your heirs or selected charities. Do this as EARLY as possible, and update your plan regularly, based on changes in your income, other assets, and life circumstances.
  • Once you have a target “sale price” for your business, work with your financial advisors to figure out what additional funds you may need to reach your post-exit financial goals.
  • In some cases, your business structure — C-corp. vs S-corp. vs. LLC or partnership –could impact your sale prospects. Consult with knowledgeable advisors during your pre-sale planning to see if you may need to change your business structure, to provide maximum flexibility when dealing with potential buyers down the line.
  • Include a serious risk assessment in your pre-sale planning to uncover any potential hidden risk factors in your business that could de-rail a potential sale should they surface during the “due diligence” phase. Remember that transparency is key. It’s best to disclose everything that could potentially be a problem up front, BEFORE it’s discovered by the prospective buyer later.
  • Keep well-organized files and business records that can be quickly and easily accessed during due diligence. This includes all financial statements and related docs, tax returns, including federal, state and local returns, personal property tax returns, payroll tax records, retirement benefit documents, and all contract and personnel files and records. It’s important to know exactly where such key business records are located so that they can be quickly and easily retrieved. A well-organized filing system for your key electronic and hard copy documents can be an invaluable asset to closing the sale of your business.