Business owners certainly don’t plan to make mistakes when exiting their business — they simply put off planning altogether. Years of running day-to-day operations often push exit planning to the bottom of the list, until circumstances force decisions faster than expected.
The good news? The most common exit planning mistakes are avoidable — if you know what to look for early enough.
Here are four pitfalls business owners often encounter.
1. Waiting Too Long to Start Planning
One of the biggest misconceptions about exit planning is that it only matters when you’re ready to retire. In reality, waiting until the last few years limits your options and reduces leverage.
When owners wait too long:
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Value-building opportunities are missed
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Tax strategies become limited
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Decisions feel rushed
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Buyers gain the upper hand
Why it matters
Exit planning works best when it’s proactive. Starting early gives you time to improve the business, address weaknesses and choose the timing that works best for you — not the buyer.
2. Over-Reliance On the Owner
Many businesses are highly successful because of their owner — but that success can become a liability during a transition.
Warning signs include:
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The owner is involved in every major decision
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Key customer relationships depend solely on the owner
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Processes live “in someone’s head” instead of on paper
Why it matters
Buyers place a premium on businesses that can operate independently. If the business can’t run without you, it’s often viewed as riskier — which can reduce value or slow down a sale.
3. Ignoring Tax Planning Until the End
Taxes are one of the most significant factors affecting how much an owner ultimately keeps after an exit. Yet tax planning is often postponed until a deal is already in motion.
Late-stage tax planning can result in:
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Higher-than-expected tax bills
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Fewer structuring options
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Missed opportunities to reduce taxes legally and strategically
Why it matters
The most effective tax strategies require time. Starting early allows for thoughtful planning around entity structure, timing and income characterization — all of which can significantly impact after-tax results.
4. Not Having a Personal Financial Plan
Some business owners focus entirely on the transaction itself — without fully understanding what comes after.
Common oversights include:
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Not knowing how much income will be needed post-exit
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Assuming the sale alone will fund retirement
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Failing to coordinate personal and business planning
Why it matters
A successful exit isn’t just about selling the business — it’s about ensuring long-term financial security and peace of mind. Without a personal plan, even a strong sale can leave owners feeling uncertain or unprepared.
The Cost of These Mistakes
Individually, these missteps may seem manageable. Together, they can lead to:
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Lower valuation
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Unfavorable deal terms
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Higher taxes
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Stressful, rushed decisions
Most importantly, they can take control away from the owner at a critical moment.
Final Thought: Awareness Is the First Step
Exit planning isn’t about predicting the future — it’s about preparing for it. Recognizing these common mistakes early gives you the opportunity to avoid them and create a smoother, more intentional transition.
Whether your exit is years away or closer than you think, the best time to start planning is sooner than most owners expect.
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Contact us here or call 800.899.4623.
