Business Succession Planning: Timing Your Exit Strategy for Success

As a business owner, you’ve spent years building something meaningful—creating jobs, supporting your community, and leaving your mark on an industry. But whether your business is thriving, in a season of change, or somewhere in between, one critical question lies ahead: When should I start planning my exit strategy?

The short answer? Sooner than you think.

Exit planning is one of the most important decisions you can make for your business—and one of the easiest to put off when day-to-day demands take priority. But waiting too long can limit your options, force rushed decisions, and compromise the legacy you’ve worked so hard to build.

‍The good news? You don’t have to have it all figured out today. Starting early simply gives you the ability to understand your options—like a traditional sale or an alternative exit like an Employee Ownership Trust—and shape a business succession plan that aligns with your values and goals.

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Why start succession planning early?

One of the biggest mistakes in company succession planning is waiting too long to get started. A thoughtful exit strategy process takes time—and the earlier you begin, the more control you have over how and when you transition.

According to the Exit Planning Institute, roughly 80% of small businesses that go to market never sell—not because they lack value, but because they aren’t ready when the time comes. Kickstarting your succession planning years in advance ensures you have the time to:

• Position your business for optimal valuation.
• Develop a strong talent bench.
• Streamline financials and operations.
• Evaluate multiple exit pathways based on your goals.

On the other hand, delaying means facing real risks like:

• Settling for the fastest exit option, not the best one.
• Losing control over what happens to your business next—or how it's operated.
• Creating uncertainty for your senior leadership, employees, and customers.

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What early succession planners get right

As one of our partners, Brad Herrmann, Co-Founder of Text-Em-All, said:

“To anybody looking at considering employee ownership or any kind of an exit from your company: starting early seems to be a really, really big part of success…if you wait too long, you might feel rushed or forced into doing something. If you can start early, you can do some of these things very, very slowly over time.”

Brad and his partners began exploring their exit options years in advance. That gave them time to think deeply, involve their team, and shape a transition plan that honored their financial goals and company vision.

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Key considerations for timing your exit

You already know you need a succession plan. The challenge is finding the time and headspace to start building one.

Running a business is all-consuming—and adding transition planning brings a new layer of complexity: legal questions, financial preparation, and leadership transitions.

But your succession strategy is also personal. Stepping away from something you’ve spent so much time and energy building isn’t easy, which can make it harder to know when “the right time” really is. When timing your exit plan, we suggest weighing three key factors: your personal readiness to step out of the business operationally and financially, company maturity, and market conditions.

Remember, business succession planning is a process, not a quick action. Beginning before you feel “ready” creates space to explore the landscape of options, then pursue a solution that meets your goals and lets you step away on your terms.

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A four-phase approach to effective business succession planning

There’s no one-size-fits-all exit strategy, and many business owners underestimate how much time a well-structured exit truly takes. Using a phased approach makes the process more manageable—and gives you time to carefully plan each stage.

Phase 1: Understand your exit options

Before making any big decisions, be sure to explore all of your available options. Do you want to transition to a family member? Are you interested in employee ownership? 

This is the perfect time to:

• Learn about the different exit strategies and their pros and cons.
• Review comparable deals in your industry.
• Evaluate what matters most to you (maximum financial return, preserving culture, ongoing involvement, etc).
• Talk with peers, advisors, or mentors about their transition experiences.

Phase 2: Prepare your business

Once your goals are set and you’ve identified a potential path, it’s time to get your business ready for the transition:

• Ensure your financials are professionalized.
• If pursuing an inside sale (to your employees or family member), understand your leadership pipeline, any gaps that need to be filled, and define a succession path.
• Document your business processes, ensure you have a pathway to hand over responsibilities, and build a plan to hand over key client and vendor relationships you may own.
• Bring in key advisors (legal, financial, tax).
• Address any operational inefficiencies or outstanding issues.

Phase 3: Design and execute the deal

This is where you formalize your succession solution and begin transitioning ownership:

• Determine your sale strategy, whether that is selling to an external buyer such as private equity and a strategic acquirer, or an inside sale such as to a family member, your key leaders, and employees.
• Get a professional valuation to understand your business’ worth.
• Depending upon the option you choose to pursue, work with advisors, accountants, attorneys, and capital providers that specialize in the option you are pursuing.  

Develop a succession communication plan for employees, customers, and vendors.

Phase 4: Transition to what’s next

This final phase—and your role—depends on which business succession plan you chose. With a third-party buyer, you may have a shorter transition period, allowing you to step out in the near term. If you’ve chosen the path of employee ownership, your involvement will vary depending upon the responsibilities of your leadership team coming into the sale: in some cases, you may transition out quickly, and in other cases you may continue on in areas like daily operations, leadership, or mentorship and transition out gradually. In either case, clear communication and planning are essential for a smooth transition.

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Employee Ownership Trusts as an alternative succession plan

Traditional exits—private equity, strategic acquisition, or other third-party sales—can provide financial security. However, because you are selling ownership to a new party, they may come with tradeoffs like layoffs, cultural shifts, or a change in product or service quality. For mission-driven owners, Employee Ownership Trusts (EOTs) offer a different path forward.

An EOT allows you to sell your company to a trust that holds ownership of the business on behalf of the employees. This approach balances a fair market sale with legacy preservation, offering benefits like:

• Competitive market-rate valuation
• Continuity of company culture and values
• Flexible transition roles for founders
• Legacy preservation

Because EOTs build on your existing team, early planning is even more important—you’re not just prepping financials, you’re preparing future stewards of the business.

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Start exploring your business transition options

Whether you’re considering traditional company succession planning models or alternative exits like Employee Ownership Trusts, the key is to begin long before your transition. The more proactive you are, the more options you’ll have to create a transition that works for you, your team, and your legacy.

Starting the journey now—even if it’s just exploring your options—will pay dividends when it’s time to take your next step. 

‍Curious how employee ownership might fit into your succession strategy? Schedule a free advisory call with one of our EOT experts today.

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