Business Owner Exit Plan Readiness Checklist

February 10, 2021
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Are you truly ready to transition away from your business? This is a critical question every business owner must ask as they develop and execute their exit plan. Cashing out and moving onto retirement or another business venture sounds enticing. However, as we discussed last week, you have to be in the right mindset to make such a major move that could impact your life in so many different ways.

Are You Ready?

So, are you ready to execute your exit plan? Here is a simple checklist to make sure. You are fully prepared if you have taken all these important steps. If not, you may need to revisit your exit strategy or rethink your personal, professional and financial motives.

  1. You have invested the necessary time and money to educate yourself on the process of exit planning.
  2. You have discussed this major transition with your loved ones and any business partners who will be affected by your move.
  3. You have aligned all your personal, financial and business goals so that your exit plan will have a positive impact on all your top priorities—not just in the short term, but in the long term, as well.
  4. You have assembled a trustworthy advisory team that includes (but is not limited to) the following professional advisors:

    • Attorney(s)
    • CPA
    Financial Advisor
    • Business Advisor
    • Spouse, Partner or Other Key Family Members
    • Estate Planning Advisor
    • Insurance Advisor
    • Investment Partners and/or Board Members
    • Tax Specialist
    • Charity Advisor
    • Business Broker

  5. You have created a thorough contingency plan (or multiple contingency plans) that lays out exactly what should happen if your exit plan doesn’t go as expected. This may include something happening outside of your control before the transition occurs. We’re talking about an unforeseen complication or disability that might prevent you from operating your business or unwillingly force you to transition earlier or later than planned. You should map out buy-sell instructions, insurance plans, tax strategies, estate planning and other specifics to cover every significant possibility.
  6. You have completed a full strategic analysis, business valuation and personal, financial and business assessments within the past year. Have you calculated your wealth gap or figured out your business value gap?
  7. You have thoroughly reviewed all your different exit options and listed all the pros and cons of each. What is your optimum exit result? Which options benefit you most? Which won’t satisfy your ultimate exit goals?
  8. You have a detailed exit plan written out. It should clearly define your goals, tasks, accountabilities, succession plan, your personal transition process, timeline and budget.
  9. You have clearly defined your role in the business both before and after the transition.
  10. You have a plan for what your life will be like post-business. This should be linked with your overall wealth management plan and retirement plan, if your next intended step is retirement.
  11. You have done your due diligence to minimize the risk of your business post-transition. What happens to it after you sell or retire from your leadership role? You want to ensure a smooth succession, maintain maximum business value, minimize tax liabilities, and take care of your family, employees and business partners.
  12. Your company’s succession plan is clear and is being strategically implemented well before it is your time to transition away from your business.

Taking All the Necessary Steps

These are the steps you need to take. These are the things you must have in place when developing and executing your exit plan. If you don’t check every box above, you simply aren’t ready for your transition.

Talk with your business advisor and advisory team to make sure all the right pieces are in place for your exit plan. Illumination Wealth is here to help with your plan. Contact us today for expert guidance from our team of financial planning specialists.