Updated 9th May, 2025
Don’t risk making your business exit without an exit strategy. If you’re like most business owners, you have plans to one day retire, leaving a healthy business legacy for others to carry on into the future, and reap the rewards of your years of hard work. The trouble is, according to a Voice of Australia Business Survey, only 19% of small to medium enterprise owners in Australia have a succession plan or retirement plan.
The majority of business exits occur upon sale of the business, but selling a business isn’t a simple proposition like selling a car or equipment. It involves selling a wide range of business assets, with multiple factors impacting business value, including customers, suppliers, staff & management. But it can also be far more valuable, as long as you know how to maximise profits and execute a successful exit strategy.
In this article, we’ll cover factors to consider when you want to maximise the exit value of your business through a well-planned exit strategy.
What is an exit strategy plan?
An exit strategy plan outlines how you will eventually leave your business. This exit plan may include different business exit strategies such as mergers, strategic acquisitions, initial public offering (IPO), family succession, or liquidation. It’s a way to provide clarity to potential buyers and prospective purchasers so you can sell the business at its true value.
Why is it important to have an exit strategy?
The need for an exit strategy isn’t just for those actively preparing to leave. All business owners benefit from having a flexible business exit strategy that serves as a roadmap for their financial goals and future goals. A successful business exit strategy helps navigate significant changes in business circumstances and ensures a smooth transition when it’s time to move on.
When should you begin to plan your business exit?
If your business is also your retirement fund, you should begin exit planning early. Ideally, business exit planning starts years before the actual exit date. According to Sue Hirst from CFO On Call, there’s no such thing as “too early” when preparing your exit strategy. Life events can force a sudden exit process, and even successful exits are more achievable with preparation.
Why should you plan early for your business exit?
Planning ahead lets you build operational efficiency, reduce owner reliance, and position your business as an attractive option to potential buyers. Early planning enables you to work on your succession planning, strengthen company culture, and improve the financial aspects of the business to appeal to prospective purchasers. Treat every day as if you’re preparing for sale to ensure a successful exit when the opportunity comes.
How to write an exit strategy in a business plan
Incorporating a clear exit strategy in your business plan ensures transparency with investors, lenders, and potential buyers. It demonstrates that you’ve considered your exit options and are actively managing your business exit plan. A detailed exit strategy strengthens your leadership image and signals a high-value opportunity.
Steps to write an effective exit strategy in your plan:
- Choose your ideal exit method: Sell to a third party, transfer to a family member, merge with other firms, or aim for a stock exchange listing. Select the best exit strategy for your business type.
- Set a realistic exit timeline: Define when and how you’ll exit. Include milestones like reducing owner reliance or securing recurring revenue to show you’re exit ready.
- Define your valuation goals: Know your financial benchmarks (e.g., EBITDA) to increase your business value and align with your financial goals.
- Outline your succession plan: Identify successors and support staff. Smooth succession planning builds buyer confidence and facilitates a successful exit.
- Prepare a contingency plan: Account for unforeseen exits—illness, death, economic disruption. This shows you’re committed to regulatory compliance and business continuity.
Review your exit strategy regularly to reflect current market conditions, personal goals, and business circumstances.
Questions to ask about your exit strategy
What are industry trends indicating?
Modern exit strategies must account for evolving market conditions. Buyers prefer businesses with long-term relevance and strong industry positioning.
- Is your business in a stable and growing industry?
- Are global changes a threat to the business?
- Do future trends present growth opportunities?
How do you measure business performance?
Shifting from tax minimisation to profit maximisation is crucial in exit planning. Profit, cash flow, and growth indicators all affect the saleability and true value of your business.
- Do your metrics show consistent profitability?
- Are your margins increasing?
- Is your cash flow improving?
What is important for business growth?
Potential buyers look for growth potential. A business that can demonstrate future scalability is more likely to yield a higher payoff during the exit process.
- Are new markets, services, or products viable?
- Are you investing in R&D?
- Do you have a formal growth plan?
What are the main risks to the business?
Exit planning should include risk assessment—financial, operational, legal, and technological. The lower the risk, the better the business looks to a new owner.
- Is your supply chain stable?
- Are you insured adequately?
- Do tech threats impact your business model?
What are the barriers to entry in your market?
Markets with high barriers are appealing in exit planning. They protect against new competitors and help solidify your company’s value.
- Is the industry difficult for new entrants?
- Do you have unique intellectual property or expertise?
What Management Information Systems do you use?
Good reporting and financial transparency reassure prospective purchasers. It reflects solid operational efficiency and increases business value.
- Are your reports timely and accurate?
- Do you track key profitability drivers?
How can you reduce owner reliance?
High owner reliance is a red flag. Establishing a capable team enables a smooth transition and increases appeal to a new owner.
- Can your business run without you?
- Have you documented key processes?
Loyal customers keep businesses thriving
Customers and staff are core business assets. Retaining them supports business continuity and builds buyer confidence in a successful exit.
- How loyal is your top-tier customer base?
- Do you have recurring revenue from key accounts?
What is your staff turnover?
Low staff turnover indicates a strong company culture, which is a key factor in business exit strategies. Show you can retain and support your people.
- Do your staff feel aligned to your business goals?
- Do you have a formal staff retention strategy?
What is your succession and estate planning process?
Your exit strategy should be as comprehensive as possible, including family succession options, insurance coverage, and a clear succession plan. These steps ensure your business continues with minimal disruption.
- Have you documented your succession planning and estate plan?
- Have you discussed ownership transfer with your family members or financial planner?
Most business owners are so focused on daily operations that they delay exit planning. But you don’t have to go it alone. Our team can provide support to help you plan a successful business exit strategy that meets your personal goals and ensures you realise the highest payoff possible.
Ready to book a call with a Virtual CFO? Contact us today on 1300 36 24 36 for an obligation-free chat!
