What is an Exit Plan?

An exit plan is a strategic roadmap for how a business owner will transition out of ownership—whether through retirement, sale, succession, or closure. It outlines how the business will be valued, who will take over (if anyone), how and when the exit will occur, and how to maximize financial and operational outcomes.

Put simply:

An exit plan is how you leave your business on your own terms, with a clear plan to protect its value—and your future.

Why Exit Planning Matters to Small Business Owners

Many small business owners are so focused on growth and day-to-day operations that they delay planning for their eventual exit. But exiting without a plan can lead to:

• Undervalued sales or forced liquidation

• Tax consequences and legal headaches

• Confusion among employees, partners, or heirs

• Lost opportunities to maximize wealth

A well-designed exit plan helps you:

• Preserve and extract business value

• Transition leadership or ownership smoothly

• Minimize taxes and reduce risk

• Meet personal retirement or lifestyle goals

Common Examples of Exit Plans

Here are a few practical exit scenarios that benefit from formal planning:

• Selling to a third party – Like a competitor, strategic buyer, or private equity group

• Passing the business to a child or family member – Requires succession planning and valuation

• Selling to employees – Through an employee stock ownership plan (ESOP) or management buyout

• Closing the business – While less common, it's still important to plan for debt, assets, and obligations

Each path has different legal, tax, and financial implications. That’s why a customized exit plan is critical.

Related Terms and Misconceptions

Exit planning vs. retirement planning: Exit planning focuses on the business, while retirement planning focuses on your personal finances. The two should work together, but they’re not the same.

Misconception: “I’ll just sell when I’m ready.” Without preparation, your business may not be sellable—or not at the price you want. Value is built over time.

Business succession: Succession is a component of exit planning that deals specifically with who will take over leadership or ownership. It’s not the whole picture.

Tips for Applying Exit Planning in a Real Business

Here’s how to get started:

• Get a business valuation. Know what your business is worth today.

• Set a target exit date. Time gives you leverage. The more you have, the more options you’ll retain.

• Identify your ideal exit path. Sale, succession, or closure? Your decision will shape the plan.

• Work with advisors. A good exit plan involves tax, legal, and financial professionals.

• Build transferable value. Improve systems, reduce owner dependency, and document key processes.

• Create your roadmap. Turn intentions into action with a written, step-by-step plan.

You can explore how this process works in more depth on our Exit Planning page.

Bottom line: Exit planning isn’t just for business owners nearing retirement. It’s for anyone who wants to protect their hard-earned value and exit on their terms.

Need help? Start planning early and reach out to one of our qualified advisors who can help you align your exit strategy with your long-term goals.