At key business milestones—whether it’s the turn of a financial year, the start of a calendar year, or simply returning from a hard-earned holiday—many business owners naturally pause to contemplate the months ahead. It’s a time to assess exactly how the business is tracking and where it is ultimately headed.
In my world, we call this Exit Planning.
Often motivated by a bit of hard-earned time away over the festive holidays, owners usually return to the day-to-day feeling one of two ways:
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Daunted: Tired by the grind ahead and wondering how you could simply click your fingers to summon a cash-upped buyer ready to take over tomorrow.
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Excited: Energized about the year ahead and wondering how to translate that momentum into greater enterprise value that puts you firmly on the radar of active industry acquirers.
Wherever you sit right now, let’s look at what an exit plan actually means for an independent business owner.
So, What Exactly is an "Exit Plan"?
If you look up the textbook definition on a site like Investopedia, you'll read something like this:
An exit strategy is a contingency plan executed by an investor, venture capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria have been met or exceeded... to limit losses, or cash out upon retirement.
In the high-flying, institutional world of corporate Mergers & Acquisitions (M&A), that clinical definition fits reasonably well.
In Small-to-Medium Enterprise (SME) land, however, it misses the mark entirely. Did you notice how the actual business owner is only mentioned as an afterthought in the final sentence?
I live and work exclusively in SME land. For me, true exit planning must always start with the owner and their personal, long-term aspirations. An institutional M&A checklist simply won't kickstart the deep introspection you need to get this right.
The Introspective Questions Every Owner Must Ask
Before looking at spreadsheet math, there are several foundational questions I believe are essential for business owners to contemplate:
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Why are you genuinely in business right now?
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What does this business provide you with, other than (hopefully) financial benefits?
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If you didn’t have the business demanding your time tomorrow morning, what would you actually do with your life?
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Do you know deep down that you will be identity-wise and emotionally "OK" when you are no longer the owner?
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What active interests, hobbies, or passions do you hold outside of the office?
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How have your important personal relationships been impacted by the business—and how would they evolve if you walked away?
Whatever your answers are, they hold a major bearing on the non-financial pluses and minuses of owning and exiting your company.
The Financial Reality: Your Business as a Balance Sheet Asset
Underpinning my enthusiasm to get owners planning early is a deliberate mix of financial and lifestyle factors. In pure dollar terms, you should:
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Deeply understand the current market value of your business (what you could realistically achieve if you chose to sell today).
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Be able to identify potential buyer types and have a firm grasp on why they might pay a premium—or demand a discount—relative to your baseline valuation.
Armed with a robust, objective assessment of your market value, you can begin to treat your business as a genuine asset on your personal household balance sheet. It is an investment that you actively control, and its value fluctuates constantly, just like listed blue-chip shares.
If you are actively planning to sell, that market value eventually converts to liquid cash. If you aren't planning to sell yet, it remains an active investment that you have sole responsibility over.
And while I’d love to tell you that you can easily borrow against that goodwill, the reality is that our real-estate-obsessed Australian banks rarely see it that way. There is still plenty of work to be done to get institutional lenders to properly back small business equity!
6 Foundational Tips to Kickstart Your Exit Plan
To build a clean framework for your future transition, start with these six strategic pillars:
Tip #1: Understand your current market value today.
Actively manage your business as a capital investment. From this point forward, assess every dollar, hour, and ounce of stress you invest into the business based on how it directly alters your final enterprise value.
Tip #2: Settle on a definitive target timeline.
Pick a target date when you could happily hand over the keys. This provides a clear horizon against which you can develop, refine, and execute operational and personal plans that make sense.
Tip #3: Accept that external factors will intervene.
While your timeline and value levers are within your control, there is a high probability that macro factors outside your control will impact your timeline. This ranges from unexpected health issues or key client departures to positive disruptions—like a strategic buyer unexpectedly knocking on your door.
Tip #4: If you have a strong business, you are already on the radar.
The healthier your operations are, the greater the chances you will receive an unsolicited off-market approach. It happens constantly. Exit planning means being ready for that call ahead of time—knowing your defendable value, understanding how to negotiate, and protecting your leverage.
Tip #5: Appointing a generic broker and hoping for the best is not a plan.
If your entire strategy is to simply sign a standard broker agreement, set an arbitrary price, and buy a directory listing, the data says you will likely fail. Selling a business quickly, cleanly, and for fair market value requires upfront strategic preparation.
Tip #6: If your business runs "under management," evaluate your options.
If your entity successfully operates under the daily control of a capable management team rather than your direct labor, you have two great paths to consider:
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Keep it: It is likely the single highest-yielding investment sitting on your personal balance sheet.
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Sell a slice: Look at selling a structured equity stake to the key management team members who are already running it.
If you are struggling with the sheer weight of getting started, remember this basic truth: To finish a successful exit plan, you just have to start somewhere.
All the best,
Michael
Next Step: Proceed to Part 2
Now that you understand the foundational personal and financial questions behind a successful strategy, it’s time to look at what an executable plan looks like in practice.
Proceed to Part 2: What is an Effective Exit Plan for Your Business?
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