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Building a successful business can take decades. However, many owners spend surprisingly little time planning how they’ll eventually leave it.
Research from Capital on Tap found that 79% of UK small business owners don’t have an exit strategy, while 36% have no plans to create one.
Leaving your business often requires adequate preparation, as you need to consider how you’ll:
- Replace your income
- Manage a potentially significant sum of money
- Adjust to a life where running a company no longer forms your daily routine.
The same research found that 29% of business owners see the emotional attachment to their company as their biggest barrier to planning an exit.
Thankfully, planning several years in advance could give you more options and help make the transition easier.
Continue reading to discover some of the steps you could take.
Start your planning efforts years before you intend to leave your business
It can be difficult to think about an exit that might be several years away, especially when your attention is focused on growing and running the business.
However, waiting until you’ve decided to sell could leave little time to deal with issues that affect the value of your firm.
The Capital on Tap source above states that business owners believe they should ideally start planning their exit just under five years after establishing their company. In reality, it typically takes them more than seven years to take action.
Starting early could give you plenty of time to consider questions, such as:
- Who might eventually buy the company?
- How dependent is the business on me?
- Could I strengthen management before leaving?
- Are my accounts and other records ready for inspection from a potential buyer?
- When would I ideally like to exit?
You may also have more time to structure your personal and business finances tax-efficiently if you plan ahead.
For instance, selling a company can create a Capital Gains Tax (CGT) liability. If you meet the right conditions, Business Asset Disposal Relief could reduce the rate of CGT on qualifying gains to 18% in 2026/27, subject to a £1 million limit.
Understanding the likely funds raised from an exit could give you a much better idea of what the sale might mean for your future security.
Define what you want your life after the business to look like
You might have spent many years measuring your success through revenue, profit, and the value of your company.
However, after an exit, these measures might fade into the background, and a new chapter begins.
So, before focusing solely on the value you want to achieve from a sale, it’s prudent to think about what you want that money to allow you to do.
For example, you might want to:
- Retire completely and spend more time with loved ones
- Travel or pursue interests you previously set aside
- Start or invest in another company
- Work fewer hours in a consultancy capacity
- Provide support to children or grandchildren
- Give some of your wealth to charity.
If you want to retire in your 50s, you may need the funds from your business to support several decades of spending. Or, if you intend to continue working, you might not need to draw so heavily on the money straight away.
Thinking about this before agreeing on a sale price could help you judge an offer according to whether it supports your desired lifestyle.
Prepare for the emotional adjustment as well as the financial one
Over the years, your business might have shaped your daily routine, relationships, and given you a sense of purpose.
As such, giving this up can be a significant adjustment, which may explain why emotional attachment was the most common obstacle to planning an exit mentioned in the study above.
You may decide that a gradual exit would better suit you than stopping immediately. For instance, you could stay involved for a period or mentor other staff during your transition.
Having something meaningful to work towards could make leaving the business you’ve spent years building feel less abrupt.
Talk to your family about what your exit will mean for them
It’s vital to note that your exit may affect your family as well as you. Your spouse or partner may have grown used to your hours and the income the business provides.
Meanwhile, adult children might expect to join or inherit the company, while you have other plans. Discussing your intentions well in advance could help you identify any expectations before they become a problem.
As an example, you could talk about whether you intend to use the sale funds to support retirement, make gifts to loved ones, or purchase a new home.
Cashflow planning could show whether sale funds are enough to support your retirement
After you sell or leave your business, you will need to rely on the wealth you have built to fund your lifestyle.
A financial planner could help you establish how much you need with sophisticated cashflow planning software.
This can model your expected assets, income, and expenditure over your lifetime, then show what might happen if you:
- Exit several years later or earlier than expected
- Receive a higher or lower price for the company
- Increase your spending during the first years after exiting
- Make significant gifts to children
- Live longer than expected.
This could help you decide how much to keep in cash, invest, or contribute to pensions to support your dream lifestyle.
Get in touch
We specialise in supporting business owners with their personal and business finances, helping you plan well in advance for an exit.
Email hello@sovereign-ifa.co.uk or call us on 01454 416653 to find out more.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
The Financial Conduct Authority does not regulate Cashflow planning.
Approved by Best Practice IFA Group Ltd on: 22/09/26