Planning Your Exit From Business

Sarah Nicole Nadler

If you are a family-owned and run business, there are a lot of people relying on you for their livelihood: your loved ones, your employees, your clients, etc.

It's such a huge responsibility, and that's why so many business owners are concerned about what will happen to the business when the owner retires, exits, or passes away.

This week on The Six Figure Biz Show I'm sharing with you the best tips & tools you need to plan your Business Exit Strategy so your family, employees and clients will be taken care of when you're gone.

So, as always, let’s pull this problem apart. 

Planning Your Exit From Business - Episode 61

FREE Retirement Guide For Business Owners

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With every episode of The Six Figure Biz, I like to empower you with a POWERFUL free resource that goes with the episode which you can implement right away to create some of the same results, if not better, in your business.

This week, since we are talking about the strategies for early retirement that are ONLY available to a business owner, I put together an Ultimate Retirement Strategy Guide so you know the best questions to ask your financial advisor.

After going through this freebie you will be able to choose a strategy that will help you retire early while living the lifestyle you're currently dreaming about.

You can download it right away by clicking on the button above 👆

Preparing To Retire From Business

If you are like most family-owned businesses, your family relies on your income. And so in order to be truly financially responsible, you have to have a plan in place in case something happens to you.

So the first thing we're going to start with are the five strategies that are only available to business owners in terms of a retirement plan. Now I went in depth on this topic in Episode 84 of The Six Figure Biz Podcast so I highly recommend you check that out.

But I'm going to touch in brief on these retirement strategies because you have to realize the formula for how much you need in order to retire is typically based on the amount of income you would need to replace when you're no longer working at a J.O.B...

That retirement planning model is the generally accepted practice right amongst the financial advisor community, and it's distributed to the general population, but it's not the best one for business owners or a service-based entrepreneur.

Firstly, a lot of the traditional savings vehicles don't make sense, right?

You don't have a 401(k), or if you do there's no one else matching it! What about a Roth or an IRA? These are both tax deferred* retirement vehicles, which means this is great if you're an employee in a job and you're expecting to be in a lower tax bracket someday when you retire...

...But it's not so hot for business owners. Because our income tends to be higher in the time of retirement than it was in the moments when we first started filling up that retirement vehicle! (Translation: you pay more taxes)

So rather than looking at how much you want to save for retirement exclusively as an exit plan...

...instead of asking, "How much do I need to save", I want you to ask yourself, "how much passive income do I want to have in retirement?"

5 Retirement Strategies ONLY Available To Business Owners

Strategy #1: Sell Your Business To A Partner

As a business owner, your company is probably the largest asset your household owns. Therefore, it only makes sense to factor the business into your retirement plan.

The first retirement strategy you should consider is to bring on a partner with the intention of selling to them eventually.

This allows you to really ensure your clients will be served the way you treated them, as you will be training your replacement and documenting precisely how things are run as part of the transition.

Doing so provides two possible retirement plans for you as the seller:

1) Your partner may take out a loan and buy you out with one lump sum.

2) Or your partner and you may choose to enter into a contractual agreement whereby the buy-out process extends years or even decades, which provides you with a potential for continuous income in retirement.

Check out episode 49 where Ben Nadler explains how to turn either the lump sum or the long-term contract into a retirement plan.


  • Retain some rights. You can structure a deal that transfers your business to your associate or partner and generates liquidity for you, but allows you to remain involved and still practicing if you so choose.
  • Train your replacement. Ensure your clients will be served the way you treated them.


  • Requires a highly-trained business owner. In order to afford a partner you must be capable of producing enough revenue to support the added financial burden until you transition. 

Strategy #2: Find A Private Buyer

The second retirement option is to sell your business to a private buyer. Look for a new graduate or up-and-coming professional or entrepreneur who wants to own their own business, without having to start from scratch.

In this option, you again have the option to either accept a one-time lump sum or offer to finance the sale of your business with a portion of the profits being paid to you over the course of years or even decades - giving you a source of continuous income in retirement.


  • Leave a legacy. Your business is more likely to continue to serve clients the way you did.


  • Possible need to finance a portion of the transaction, which can leave some of your income at risk. 

Strategy #3: Move "Up" In Your Company, Not Out

Your third potential retirement strategy as a business owner is to "move up" in your company, rather than selling.

This means hiring and training a dream team, and grooming a replacement CEO or manager for your business so you can leave without selling.

You become an "absentee owner" who retains full rights over the company without having to manage it or deliver the service personally.

This is a great option for having continuous income in retirement as well as a way for those professionals who love what they do to keep working at a more comfortable pace.


  • Help retain clients. By not transitioning, you prevent the interruption of client flow in the business and thereby help keep the production steady and expanding.
  • Keep working as long as you want to. If you love what you do, why stop completely?
  • Reduce the risk of running out of income in retirement. By retaining ownership of your company, you create a continuous source of income in retirement which mitigates against the risk so many retirees face.

Strategy #4: Obtain A Buyout Or Merger

Another strategy is selling your business to a corporation when you're ready to transition, so they can either take over or merge your business with theirs.

Selling to a corporation has numerous advantages.

It helps ensure you will get market value on your business at the time of sale, provides a cash injection into your household upon retirement which you can use to fund a multitude of financial products and investments, and leaves a legacy behind by ensuring your company will continue serving clients and the community.


  • Diversifying your personal finances. If your business is your most valuable asset, selling it to a corporation allows you to turn that asset into more liquid and more diversified investments.
  • Leaves a legacy. Your business will remain open and continue to serve the community.


  • Relinquishing control. Most corporations have a highly-structured business model. Your way of serving clients may not remain the same after selling.

Strategy #5: The BEST Way To Retire Or Exit Your Business

As a business owner, the BEST strategy for exiting your business is to choose one of the four options I mentioned previously, and combine it with a retirement saving plan.

There are many options out there, such as a ROTH, IRA, 401(k) or something like a 7702a Account, which is a type of life insurance policy, and combining that with the sale or transfer of your business can provide a source of passive or semi-passive income in retirement.

Pro Tip: Don't try to figure this out on your own! Work with a licensed financial advisor to make sure you are taking advantage of all the options available to you as a business owner.

Preparing In Case Something Goes Wrong Before Your Retirement Kicks In

"The best laid plans of mice and men often go wrong, and leave us nothing but sadness..."

Too often in life we lay down the very best plans, but things do not turn out the way we wished them to.

Nowhere is this more sad than in the case of a family-owned business. What if something goes wrong before you retire?

Take a moment to look around you - at the business you have, the employees who put their trust in you, and at your family.

It is soo easy to get caught up in the day-to-day, and forget tomorrow.

Part of being financially responsible as a business owner, is putting financial tools in place in case you become ill, injured, disabled or pass away before retirement.

Because let's face it: there are some really important people in your life who are depending on the income you bring in with your business.

And in too many cases that I have seen as a business consultant: the business owner had no fall back plan.

Last year, one of my private coaching clients was diagnosed with cancer. A very special woman, she served her clients with a unique mixture of western and chinese medicine that NO ONE else in her state could offer.

She got ill so quickly there was no time to put another practitioner in place and train them to do what she could do. She had no guidelines for what she wanted done, no instructions I could legally execute because she was intubated and unable to respond to my emails or calls.

As a result, her family had to carry the burden of her medical bills without the income that her practice normally brought in...and when she passed away the family liquidated the assets and closed her practice.

Some say this is the nature of entrepreneurship - it entails risk. While there is some truth to that to be sure... there ARE financial and legal tools that were designed to mitigate that risk. And only an ignorant, foolish or irresponsible person would fail to use them.

In her case, it was ignorance and that is on ME for not insisting that she have an Exit Plan for her business. She was so young...but I was foolish to not insist.

So I am recording this episode and saying these words with such force and bluntness because I have seen the resulting disaster when a business owner did not take the time to plan until it was too late.

In the US, 70% of small businesses fail when the owner dies before the next generation can take over.

So guys, as family owned businesses, we've got to get better at succession plans - at putting something in place to make sure your business survives something happening to you.

For the sake of your family.

For the sake of your employees, and for the sake of the community and clients that you serve!

How To Create A Written Exit Plan For Your Business

There are so many factors that come into play when you don't have a written plan of how your business will be dealt with in the event that you become ill or incapacitated or pass away.

We really need to take responsibility for this as business owners and make sure we have this plan together from day one. Don't wait until your first first health scare, alright?

Don't wait until you start looking at retirement.

You should have your exit from business planned out the day you start your business, or the day you quit your 9-5 if you're scaling a side hustle.

One tool you should be aware of in creating a written exit plan for your business is a buy/sell agreement.

A buy/sell agreement is a legal agreement for the sale and purchase of a business interest at the owner's death.

It can be used for any type of business entity (sole proprietorship, partnership, LLC, corporation, etc). No matter what type of entity you are, a buy/sell agreement is a golden goose for your family in case something happens to you, because it will ensure that your business is passed on in the way that you intended.

When we put a buy/sell agreement in place, we're simply naming every person who has a vested interest (meaning they have some potential of earning or inheriting something from the business) and we're defining what terms under which those actions will be taken.

Your written exit plan should outline what you want done with the business, name who will have the rights to what part of it, and a buy/sell agreement should be in place to keep your written plan legally binding.

Of course, funding the buy/sell agreement is a major part of your business exit plan, and that is something I can help you figure out.

In Summary

I hope you found this episode helpful!

Once you have an exit strategy in place, you will need a licensed financial advisor to help you design the best written financial plan for you, your family & your business.

We can help.

Click here to schedule your FREE 1:1 financial consultation

About the Author

Sarah Nicole Nadler is an investor and licensed financial advisor on a mission to help Americans stop trading time for money. When she’s not serving her clients, she geeks out on board games, writes fantasy novels, and explores the great outdoors with her husband Ben.