Exit planning is the work done in the years before a sale, as distinct from the sale itself. Almost all of it comes down to one thing: making the business worth more to somebody who is not you. That takes long enough that the owners who do it well started before they had decided when, or even whether, to sell.
What exit planning actually consists of
Reducing owner dependence, which is the largest single item and the slowest. Getting the records into a state that survives examination. Putting the important relationships and agreements in writing. Building whatever recurring revenue the business can support. Making sure the management layer exists and is capable. None of these are exit-specific: every one of them makes the business better to own in the meantime, which is why exit planning is worth doing even by owners who never sell.
Exit strategy for small business owners
An exit strategy for small business owners has fewer routes than the literature suggests. Realistically: sell to an outside buyer, sell to management, sell to employees through a trust, pass to family, or wind down and sell the assets. Each suits different circumstances and each has a different lead time, with family succession and employee ownership needing the longest runway. Choosing early matters less than understanding that the choice constrains the preparation, since preparing for a trade sale and preparing for family succession are not the same work.
Business succession planning is the people half
Business succession planning answers who runs the business afterwards, which is a separate question from who owns it. A trade buyer may bring their own management or may be relying on yours. A family transfer needs the next generation to be both willing and capable, and the willing part is worth establishing honestly rather than assumed. Business succession that has not been discussed openly with the people it concerns is a plan in one person's head, and those tend not to survive contact with the moment they are needed.
Questions people ask about business exit planning
What is exit planning?
The work done in the years before a sale to make the business worth more to somebody who is not you: reducing owner dependence, cleaning records, documenting relationships, building recurring revenue.
What are the realistic exit routes?
Sell to an outside buyer, sell to management, sell to employees through a trust, pass to family, or wind down and sell the assets. Family and employee routes need the longest runway.
How is succession different from exit planning?
Succession answers who runs the business afterwards; exit planning covers who owns it and what it is worth. A succession plan never discussed with the people concerned rarely survives being needed.