The following is a guest blog post submitted by Greater Mankato Growth member, Eide Bailly. The blog post is about creating an exit plan for business owners and how they should best prepare themselves.

Are you part of a Greater Mankato member business and have an interest in writing a guest blog for us? Send 500-800 words to [email protected] or reach out to Greater Mankato Growth with further questions.

Exit planning is a vital part of the lifecycle of a business. It seems simple at first: how do you plan to exit your business? But the options, and compliance factors, that go into exit planning can leave your mind reeling. That’s why it’s best to plan early.

Not sure where to get started? Here are seven key questions to ask yourself as you begin to exit plan.

How much longer do I plan to work/stay involved in the business?

It usually takes a few years to develop an exit strategy. Ideally, an exit strategy will be part of the original business plan, keeping in mind that strategy may change over time. Ideally, there will be at least three to five years before a sale.

How much control do I want after my exit?

Having a better understanding of what you want will help you when it comes to articulating this to fellow stakeholders. If others don’t know they are part of a plan, they’ll make their own plan. These conversations will also better prepare you to work with exit strategy advisors.

How do I plan to replace myself?

You built your business, but it’s important you are not the glue that holds everything together. The real value of your business is in the team you have built. If the business can’t function without you, you must find a way to transfer or replace what you do.

Are my records ready?

If you want to get the full asking price for your business, your records need to be clean and organized so a third party can go through them with a fine-tooth comb. A key component is quality of earnings due diligence, which analyzes your organization’s financial information. This process is completed by a third party because it helps you substantiate the cash flow and ultimately the value your business.

Do I know what my business is worth on the market?

You need to know with brutal honesty the market value of your business–not what you think it’s worth. Market value always trumps what you “need” out of the business. Use independent expertise to value the business before you get locked in during a negotiation.

What am I doing now to maximize my future after tax dollars?

Don’t look at taxation in isolation. Revisit your business plan now and consider the tax implications for every investment, your projected growth and even your own compensation package. Expand your strategic planning to include contingency planning, succession planning, transition planning, and then run some financial models to see which options look most attractive for your future.

What is your next great adventure after you leave your business?

Now is the time to get creative and imagine a new life for yourself. Have fun dreaming. The possibilities are endless. But remember, plans evolve. So, revisit your answers to the first six questions and verify they align with this next great adventure.