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Top 5 Business Exit Planning Mistakes We See

Cypress Wealth Services

August 2023

Many business owners have the majority of their wealth tied to their business. As such, you want to make sure the process of transferring your business to a family member or selling to an interested buyer goes as smoothly as possible. At Cypress Wealth Services, we’ve helped business owners like you navigate the complexities of exit planning. These are the five most common mistakes we see in our firm.

Misunderstanding What Makes Your Business Valuable

Putting a price tag on your family business isn’t as simple as you might think. While you may have an emotional connection to the business you’ve built, your buyer likely doesn’t. When you’re not clear on what makes your business valuable, you could undervalue or overvalue your business.

To better understand how much value your business holds, you’ll want to consider these factors:

  • Customer base
  • Cash flow
  • A strong management team
  • Physical assets
  • Intellectual property and digital assets

These are just some of the essential parts of your business that a potential buyer might include in their decision-making process of purchasing your company. For an impartial valuation of your business, start with an informal business valuation.

Doing an informal version of this step first could be less expensive than the formal version and provide you with a basis to work from. With a general idea of how much your business is worth, you can identify potential gaps and make necessary improvements to increase the business value to reach your monetary goals from the sale.

Delayed Exit Planning

A costly mistake many business owners make is putting off their exit planning. The components of a successful exit plan include several moving parts that require an adequate amount of time to institute.

  • Strategizing and implementing the plan
  • Getting the most value from your business
  • Mitigating taxes
  • Aligning your personal wealth with income sources outside of the business.

Even if you don’t plan on stepping back from your business anytime soon, you can take some pressure off your future self by exit planning well ahead of time. Some tax-efficient strategies for selling a business require over a year or two of advanced exit planning. Even without a sale in the immediate future, it’s never too early to meet with experienced advisors.

Being Irreplaceable in Your Business

While it feels good to be needed, a major selling point of your business is how transferable it is to new ownership. Self-managing companies are more marketable to potential buyers since the owner is not critical to the business’s future viability. You’ll want to assess how your business runs from these standpoints to determine how transferable your business is:

  • Are you the face of your business?
  • How much responsibility do you carry on a daily basis?
  • Do you have a strong dependable management team?
  • Does your business have established processes and systems in place?
  • Are you the only one with specialized skills or knowledge needed to run the business?

It could just be time to move on to the next phase of your life, or a devastating event could have rendered you unable to continue managing your business. Either way, a successful exit plan facilitates the smooth transfer or effective sale of your business while retaining its value—another reason why starting sooner rather than later is important.

Not Having a Clear Reason for Selling

As a business owner, you might be more focused on the day-to-day rather than the long-term view of your business. While the proceeds from the sale are an obvious benefit of exit planning that leads to a sale, you may want to consider the other reasons behind the decision.

If financial security is the only reason you’re looking to sell, you could work with a financial planner to identify other methods that don’t involve selling. However, if health or family reasons are behind your exit, then it may be a valid choice. Without a clear understanding of why you want to exit your business, you could regret your decision down the line.

Not Seeking Professional Assistance

Working with a financial advisor you trust is a great way to start the exit planning or succession planning process, as preparing for the sale of your business takes careful consideration around multiple aspects of your company.

The team behind you (or lack thereof) can make or break your business sale. In addition to the skill and knowledge of a financial advisor, you may need to involve an attorney, business broker, insurance professional, and a CPA to assist in the various parts of the sale or business transfer.

Alleviate the Stress of Selling a Business

Deciding to sell or transfer your business isn’t a decision you make lightly. At Cypress Wealth Services, we know how to help you balance the challenges of establishing an exit strategy for your business. As skilled professionals whose first priority is your best interests, we’ll help alleviate the pressure of planning for your financial future. If you’re ready to plan your succession strategy or begin exit planning, call us at 866.888.6563 or contact one of our offices today.


About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high-net-worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services serves a broad range of client needs using their knowledge and expertise to act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring the wealth and legacy a person has already built to their loved ones. With financial advisors in California, Alaska, Arizona, and Georgia, the firm serves clients across the country with Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit or call 760.834.7250.