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Value Acceleration & Exit Planning

7 Essential Steps for a Successful Exit Planning Strategy

As a business owner, having a succession or exit plan is essential to your company’s future. An exit plan ensures that your business is prepared for all contingencies and helps develop high-potential candidates to fill future leadership and other roles.

Learn why exit planning is vital to your business and discover seven essential steps for a successful exit plan.


What is Exit Planning?

Exit planning refers to how a business transfers leadership roles to keep the company running smoothly as business owners retire or pass away. Exit planning involves strategically hiring and training employees to take on leadership roles so that the company can continue running without interruption when a vacancy occurs.

Exit planning also ensures that your company moves talented people through the leadership pipeline, giving employees the opportunity for advancement, which is crucial in the modern workplace. Diversity concerns and workforce shortages are causing many companies to struggle with filling positions left by retiring managers and executives.


Why is Developing an Exit Planning Strategy Beneficial to Your Business?

Developing a successful exit planning strategy for your business promotes the following benefits:

  • A transfer of knowledge that ensures the continuation of your business
  • Better organization and strategizing when hiring and promoting employees
  • Identifies training needs and skill gaps
  • A shared sense of value and vision among employees
  • Brings in new talent with diverse backgrounds and experiences
  • Preparedness for all contingencies

Finally, exit planning provides you with a strategy when you want to retire or sell your stake in the company. A well-crafted succession plan allows your business to continue uninterrupted without you if you retire or some other unforeseen event happens.


How to Develop an Exit Plan

Developing an exit plan strategy depends on the type and size of your company. Generally, you will want to consider the following elements when creating an exit plan:

  • Your company’s organizational structure
  • The scope of your exit planning strategy
  • How to implement the plan
  • Ways to measure the plan’s success
  • Plans for transitioning roles

You will also want to consider different business succession planning strategies to decide which option works best for your company. Options include selling to a co-owner, leaving it to an heir, or selling it to employees or a third party.

Not sure which option is best for you? Windes Exit Planning advisors will ask and answer all the business, personal, financial, legal, and tax questions involved in transitioning your business. We will develop a successful plan that will accomplish all of your personal and financial goals for both you and your business.


7 Steps for a Successful Exit Planning Strategy

An effective exit planning strategy helps you identify and develop future leaders for all critical roles in your business. The right approach prepares your company for all possible contingencies and helps train current employees for the future. Your exit planning strategy should include the following seven steps:

  1. Be Proactive

The biggest key to developing a successful exit plan is to be proactive. While you may wait until a few years before retirement to worry about a succession plan, it is prudent to start planning earlier. A proactive approach can help you prepare for unexpected situations and allows you to work on accelerating the value of your business for a future sale.

Start thinking about the impact of different positions in your business and how a vacancy in one of those positions affects business flow. If your accounts payable or receivable rely on one or two people, your business could face delays or other problems paying employees or clients. Use this strategy to have a backup solution in place.

  1. Identify Succession Options

As you consider the positions you may need to fill one day, look around your company and identify employees who could make successful succession candidates. Consider multiple options, including those next in the organizational chart and who may possess the skills and talent needed to fill your leadership positions. This also allows your business to diversify leadership and management roles.

When identifying candidates, consider what type of training they may need to grow into the position. The earlier you examine your options, the more prepared your company will be when vacancies occur.

  1. Discuss the opportunity with candidates

Discuss your thoughts with the people you have identified as prospective succession candidates. While some may jump at the chance to step into a leadership role, other employees may have different career goals in mind.

By discussing the possibilities with them and discovering their goals and commitment level to your company, you can better understand whether they fit into your exit plan.

  1. Train and develop candidates

As part of your exit planning strategy, include training and development for candidates. Ideally, you will invest in professional development courses to teach them skills they will need to perform at a high level. You can also begin a mentoring program to impart company-specific knowledge unavailable in general training sessions.

  1. Hire with the exit plan in mind

A significant element of a successful exit plan is to hire employees with succession in mind. Choosing succession candidates is much easier when you have a talented pool of capable candidates. Focus your recruiting efforts on attracting new hires who already possess the qualities you need to lead your business.

  1. Try out your exit plan

It is vital to give your exit plan a trial run before turning your company over to new leadership. A trial allows you to observe where your strategy works and where it fails so you can adjust it for success.

It also provides your succession candidate or candidates with an opportunity to show what they have learned and how they will handle running your company once you have exited your position.

  1. Plan for obstacles

Preparing for potential obstacles is the final element of a successful exit plan. The best way to do this is to work with a professional exit planning firm like Windes. We have the expertise to identify the barriers to a successful exit strategy and the solutions you can implement to overcome them. We can assist with goal assessment, choosing a successor, and finding the right transfer strategy for your business.


Plan for Your Business’s Future

Ensure your businesses’ continued success with a well-organized exit planning strategy. Windes specializes in business exit planning and wealth transition strategies that will maximize the value of your business at the time of exit, while minimizing your tax burden, ensuring you are able to accomplish your personal and financial goals in the process. Get started with your exit planning strategy today.


Rob Henderson
Robert B. Henderson, CPA, MST, CEPA, CM&AA

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