One way or another, every business owner exits their business.

Over the past few years I've valued more than 100 Sacramento area businesses. Fewer than 10 of those owners had a real exit plan. The other 90 tend to run into the same set of problems when they try to sell.

What Happens Without a Plan

An owner builds a successful business over 10 or 20 years. At some point they start thinking about selling, but they don't put a plan in place. Instead, they keep at the day-to-day, telling themselves they'll plan eventually.

Eventually, burnout sets in. The owner ends up doing more of the daily work themselves and has less energy to plan ahead. Marketing slows down, hiring stalls, and customer relationships get harder to maintain because the owner has been the primary relationship, and the owner is now tired.

Two or three years pass like this. By the time the owner finally calls me, revenue has been flat or declining for several quarters, the team is smaller than the business needs, and the financials show a business losing momentum.

Buyers value a business based on its recent performance and growth direction. One that has grown 8% a year for three years is worth more than one that has been flat or declining. By the time these owners list, they aren't getting what they would have gotten three years earlier. Many accept a lower price than they hoped for, which means less money for life after the business.

Putting a plan in place early prevents this outcome. A good exit plan ensures your employees and customers are taken care of, gets fair value for what you've built, and lets the sale make a meaningful contribution to your retirement.

The timing also matters more now than it used to. Entrepreneur reports that roughly 41% of US businesses are owned by baby boomers, with about 12 million boomer-owned companies expected to come up for sale in the years ahead. When that many sellers enter the market at once, buyers have more options, and businesses that haven't been prepared in advance tend to get passed over.

Step 1: Get a Real Valuation Now

Most owners only think about valuation when they're ready to list. By that point, there isn't much time left to influence the number.

Get a professional business valuation two to five years before you plan to exit. Two things become clear: what your business is worth on the open market today, and how that compares to what you'll need from the sale.

If your current value falls short of what you need to retire on, you have time to do something about it. If you're $400,000 short, you know how much value you need to add before listing. Without a current valuation, you're guessing.

I recommend updating the valuation every year. Industry multiples shift, your customer mix changes, you might land a major contract or lose a key account. Checking once a year keeps you current on what your business is worth.

Step 2: Set a Target Date and Work Backward

Pick a target date, even an approximate one. Without a date, the planning gets put off and the actual work never gets started.

Two to five years out is usually the right range. It gives you enough time to make changes without locking you into a specific timeline.

Once you have a date, define what a successful exit looks like for you. What do you need to walk away with after taxes and fees? Do you want to stay involved as a consultant or employee, or do you want to be done on closing day? What happens to your team and your long-term customers? Are you open to seller financing if it gets you a better price?

With those answers, you can lay out what needs to happen between now and then. If the business needs three more years of revenue growth to support your number, that work starts this quarter. If your books need cleaning up, your CPA starts next month. The plan becomes a list of specific things to do, with deadlines attached.

Step 3: Make the Business Less Dependent on You

This is where most of the owners I value are weakest, and where the biggest improvements can be made before a sale.

Buyers are looking for a business that continues to generate income after the owner leaves. If too much of that income depends on the current owner, the offer comes down. If you are the head salesperson, the technical expert, the customer relationship manager, and the operational decision-maker, the buyer is essentially taking on your job. They have to figure out how to fill that role from

day one, and the offer reflects that risk.

Ask yourself this: if you took 60 days off starting tomorrow, what breaks? Whatever appears on that list is hurting your sale price. Each item needs to move from your head into a person, a system, or a written procedure.

This work takes the longest to do, which is why it has to start early. Hire and train a second-in-command. Document the standard operating procedures that live in your head. Build customer relationships at the team level so they don't all run through you. There are several proven ways to make your business less dependent on you. Any one of them is a reasonable place to begin.

A business that runs without the owner sells for a meaningfully higher multiple than one that doesn't. The difference can be 30% or more on the same revenue.

Step 4: Clean Up Financials and Document Operations

When a serious buyer puts your business under due diligence, they will look at three years of financials in detail. Tax returns, profit and loss statements, balance sheets, customer concentration, supplier contracts, lease terms. Every personal expense run through the business will surface. Every line item categorized as "miscellaneous" will get questions.

Start cleaning these up well before you list. Work with your CPA to make sure your books accurately reflect business performance. Stop running personal expenses through the company in the year or two before sale, even if it costs you some tax savings. Clean books speed up due diligence and give buyers more confidence in what they're acquiring.

Documentation is just as important. Operating procedures, employee handbooks, supplier lists, customer contracts, vendor relationships. If a process exists only because you remember how to do it, write it down. Documented operations make the transition easier for a buyer to picture, and that confidence shows up in their offer.

The SBA's guide on closing or selling a business is a useful starting point for owners new to the process. Combine that with industry-specific guidance from your broker and CPA.

Step 5: Plan What You'll Do After the Sale

Many owners skip this step, and it can cause problems at the negotiation table.

When a buyer asks what you plan to do next and you don't have a clear answer, it raises questions. Some buyers worry that you'll change your mind mid-deal. Others assume you have unrealistic expectations about staying involved after closing. I've seen sellers slow their own deals down because they suddenly couldn't picture life without the business.

Have a real answer ready before you list.

• What will fill your time?
• What does your financial picture look like with the sale proceeds plus any other income?
• Will you consult, travel, start something else, or retire?

This is also the time to plan how your team and customers will experience the change. The smoothest transitions I've handled had a clear handoff plan that protected continuity. Employees kept their jobs and customers stayed with the business. Buyers in those deals saw real value in the stability and made stronger offers because of it.

Key Takeaways

1. Get a baseline valuation 2 to 5 years before you plan to exit, and update it every year so you know where you stand.
2. Pick a target date and work backward. Without a date, the work tends to get put off indefinitely.
3. Reducing the business's dependence on you is where most owners can add the most value. It also takes the longest, so start there.
4. Clean books and documented operations make due diligence smoother and protect your sale price.
5. Plan your post-sale life. Owners without a clear answer to "what's next" can create problems during negotiation.

Owners often plan to start exit planning once things calm down at the business. In practice, things only calm down when the owner runs out of energy, and by that point the business is worth less than it was when the owner was at full capacity.

A plan changes the timing. You can sell while the business is still strong, your team and customers are looked after through the transition, and the sale proceeds make a real contribution to your retirement instead of making up for years of decline.