The Exit Strategy You're Not Planning For (And Why You Should Start Today)
What every business owner needs to know about building a sellable, resilient business before it's too late
Most entrepreneurs start their business with one of two exit dreams in mind: selling for millions like a tech unicorn, or simply walking away when they're done. But here's the reality check from our recent workshop: many businesses end up at a dead end, with owners wondering what happens to everything they've built.
The truth? We're all going to exit our businesses eventually. The only question is whether we'll do it on our terms.
The "Used Car Test" for business value
Michelle Scribner shared a brilliant analogy during the workshop: imagine two identical used cars, same year, same mileage. One was driven by a teenager, the other by an elderly person who kept meticulous maintenance records. Which one would you buy?
The answer is obvious. And that's exactly how potential buyers look at your business.
Your company's value isn't just about the numbers on your profit and loss statement. It's about trust, reliability, and documentation. It's about showing a clear track record that gives buyers confidence in what they're purchasing.
When taking out business expenses actually helps you
Here's a counterintuitive insight from the workshop: if you're thinking about selling within the next few years, consider stopping certain expense practices.
Running personal travel through your business? Strip it out and pay for it personally. Taking advantage of that gray-area deduction? Remove it from your books. Why? Because when you claim "the new owner won't need this expense," buyers get skeptical.
The more adjustments you have to explain, the less trustworthy your data appears. Clean books that reflect true business operations are worth more than tax-optimized books full of owner perks.
Yes, you might pay more in taxes short-term. But you're building a more valuable, more sellable asset.
The four-week vacation rule
Can your business survive without you for four weeks?
This isn't just a thought experiment. It's a litmus test for one of the biggest value-killers: key person dependency.
Michelle learned this firsthand when her daughter had twins in the NICU. She stepped away for eight weeks, working only minimally. The result? Her company kept running, and she identified exactly where the gaps were.
If your business can't function without you, you haven't built a business. You've built yourself a job with extra steps.
Why your top client could be killing your value
When one to three clients make up more than 20–30% of your revenue, you have a critical vulnerability. Michelle calls this "key client risk," and it's a red flag for any potential buyer.
Ask yourself: if you lost your biggest client tomorrow, would you have to lay people off? Are you operating differently just to serve that one account? If yes, you've got work to do.
The solution isn't necessarily dropping that client. It's about building additional revenue streams so no single relationship has outsized power over your business's fate.
The China problem (and other single channel risks)
Remember when Google changed its algorithm and businesses that relied entirely on Google Ads collapsed overnight? Or consider e-commerce companies now struggling because they sourced everything from China and have no backup plan for tariffs.
This is single channel risk, and it comes in many forms:
Relying on one supplier
Depending on one marketing platform
Using only one distribution method
Having one way to deliver your service
The businesses that survive market shifts aren't necessarily the biggest or most profitable. They're the ones with backup strategies in place.
The surprising truth about repeat business
For subscription and service-based businesses, client retention is gold. Michelle's bookkeeping firm retains clients for 4–9 years on average. When they sign a new client, they can project that lifetime value and plan accordingly.
But what about businesses that aren't subscription-based?
Don't just say "we have great repeat business." Show that 30–40% of annual revenue comes from previous customers. Document average customer lifetime value. Prove the pattern exists.
Numbers tell a story that words alone can't.
Why Michelle has a full-time "happiness" position
At Sum of All Numbers, one employee's entire job is keeping clients happy. That might sound extravagant, but the math makes perfect sense.
When you know your retention rate and average client lifetime value, you can calculate exactly what that relationship is worth. For Michelle's firm, with 4–9 year client relationships, preventing one departure pays for that position many times over.
The cost of client acquisition versus the cost of retention isn't even close. Happy clients who stay are exponentially more valuable than the constant churn of finding new ones.
What the multiplier really means
After calculating your EBITDA, you apply a multiplier to get your business valuation. In accounting, that multiplier might be around 1.0. In technology or preschools, it could reach 5.0.
But here's what Michelle emphasized: the multiplier is not pulled from thin air. It reflects risk.
Lower risk = higher multiplier = greater value.
Every risk you eliminate, every system you build, every process you document increases that multiplier. This is where the real value creation happens.
The great depression and jewelry sales
When discussing market risk, Michelle shared a fascinating data point: during the Great Depression, jewelry sales remained level.
The lesson isn't about jewelry specifically. It's about understanding your market deeply enough to know what's truly discretionary spending and what isn't. What assumptions are you making about your industry that data might contradict?
Don't guess about how economic shifts will affect your business. Research it. Know it. Plan for it.
Start building exit value today
You don't need to be planning a sale next year to benefit from thinking about business value. Every principle that makes a business sellable also makes it stronger, more resilient, and less dependent on your daily involvement.
Can you take a month off without everything falling apart?
Do you have backup plans for your key revenue channels?
Is your financial data clean and trustworthy?
Could someone else step in and run things?
These aren't just questions for entrepreneurs planning an exit. They're questions every business owner should be asking right now.
Because whether your exit is in five years or twenty-five, the time to build a valuable, sellable business is today.
Want more insights like this?
This blog is based on insights from one of our Sum of All Numbers workshops: practical, no-fluff sessions designed to help business owners build stronger, more profitable companies.
Explore upcoming workshops: Browse our full workshop lineup to find sessions on strategic planning, financial clarity, business valuation, and more.