In my work as an exit strategist, I’ve heard multiple reasons from business owners for not starting an exit plan, often because it seems too far off to think about. Many haven’t considered the immediate rewards it yields, including a thorough business plan that can be used to support growth in their company today!

So, there must be other reasons for avoiding it, right? There are.

Dr. Michael Klein, President of MK Insights LLC, writes that business advisors widely agree that the biggest barrier to the transfer or sale of a business is often the owner’s own internal, emotional roadblocks.

He points out that planning and executing an exit strategy is emotionally complex, so owners are likely to focus on nuts-and-bolts components of the plan that are more familiar, comfortable, and quantifiable – like financials.

The emotional and psychological aspects of exit planning are not often discussed and there are few tools and little training to address this obstacle.

I often refer to exit planning as the largest financial transaction of one’s life. Klein refers to it as perhaps the most difficult psychological transition of a business owner’s life. He shares that three areas – loss, replacement, and departure – when acknowledged and explored, can help business owners understand their reluctance and needs and embrace the exit planning process more fully.

According to the Business Enterprise Institute (BEI), a Denver-based organization that focuses on research and education related to exit planning, there are costs and consequences when exit planning is postponed.

Their research finds that many business owners expect to start their exit planning once they decide to leave. But the reality is, at that point, that it’s far too late – both the owner and their business are unprepared for an exit. Keep in mind that your exit affects far more people than yourself. Your family is impacted, of course, but your loyal employees have counted on you and your company – and its well-managed future – to provide for their families.

BEI finds that, even though they postpone starting an exit plan, most business owners are aware that their companies are not ready to run without them. They point out that, “…preparing a business for a successful exit takes years, not months. The earlier owners start, the more control they have over the outcome.”

The realities of waiting too long are real. According to BEI, there are three critical truths that business owners need to understand:

1. There is often a significant gap between the owner’s current financial situation and what they will need to exit on their terms.
2. Bridging that gap takes time, a clear strategy, and consistent effort.
3. Exit planning isn’t just about leaving your company – it’s about growing its value, which is a necessity no matter when the owner exits or what path they take.

These three points are the foundation of exit planning with a straightforward objective to build a stronger, more valuable business that will meet the goals you have for yourself, your family, and the future of the business you have worked so hard for, perhaps most of your life. Effective exit planning must start well before that transition takes place.

Dr. Klein’s focus is on executive, leadership, and professional development, including work with those in family business, as reflected in his book, Trapped in the Family Business, A Practical Guide to Uncovering and Managing This Hidden Dilemma. Read his article to understand more about emotional roadblocks to exit planning. Although written from a family business perspective, it applies to any business owner and is worth the read.

I invite you to contact me for a complimentary consultation to discuss starting your own exit plan. Once you have a strategy in place and realize the benefits – not only for your future, but to your company today – you’ll wonder why you waited.

Bob Zarlengo is a certified exit strategist and CPA. More than four decades of experience in public accounting along with expertise in financial reporting, income and estate planning, and tax compliance makes him a valued and trusted advisor to his clients.