Most owners think the question to ask before selling your business is about price. It isn't. In 33 years advising business owners on exit planning and wealth strategy, I have found that the plans that hold up are not the ones built around the biggest number. They are the ones built to survive being wrong.
If you own a business and you are within a few years of selling it, or you already sold and are managing what is left, there is one question I wish every client had asked me on day one: what happens to this plan if I am wrong about something? Not if the market cooperates. Not if the timeline holds. What happens if it does not.
The frame
Every financial plan and every exit plan is built on assumptions. A sale in a specific year. A specific multiple. Good health through the transaction. A spouse or partner who agrees with the timeline.
Most of the time, nobody says these assumptions out loud. They just get baked into the spreadsheet as if they were facts instead of guesses. That is not a criticism of the planning process. It is how plans get built, because you have to start somewhere.
The problem shows up later, when one of those assumptions does not hold and the plan has no answer for it.The plan was never wrong on the math. It was incomplete on the range of what could happen.That gap between a projection and a realwealth strategyis where most plans quietly fail.
The list
Here is what I have learned watching owners go through this, in plain terms.
Every plan assumes something you cannot control
Interest rates, buyer appetite, your own health, your family's priorities: none of these are yours to decide. A plan that only works if all of them cooperate is not really a plan. It is a hope with a spreadsheet attached.
A plan built for one outcome is a bet, not a plan
Hypothetical example: a business owner with a growing services company might build an exit plan around selling in eighteen months at a specific multiple. If the sale takes three years instead, or the multiple compresses, the plan has no second answer. That is a bet on a single outcome, not a plan for a range of outcomes.
The stress test matters more than the starting number
Financial planners have a term for this: probability of success. Instead of running one projection, the plan gets tested against thousands of possible paths, different market returns, different timelines, different spending patterns, to see how often it still works. Most planning professionals look for a probability of success in the 85 percent range or higher before calling a plan solid, according to research on retirement income planning fromKitces.com. A plan that only shows you the average outcome is not showing you the plan. It is showing you the best guess. This is the same discipline behindwhy hitting your number never feels like enough: a single target number was never the whole plan.
Advisors rarely ask this question first
Most first meetings start with the number: what do you want to sell for, what do you want your portfolio to look like. Those are fair questions. But they come before the one that actually determines whether the plan survives contact with reality. I have started asking it first, because the answer changes almost everything that comes after it, includingwhen to start exit planningin the first place.
The analogy
Anyone who has lived in Texas long enough knows the saying: if you do not like the weather, wait five minutes. Nobody builds a house here around a single forecast. You plan for the range, the drought, the sudden storm, the mild week in between.A financial plan or an exit plan deserves the same respect.Build it around one forecast, the exact sale price you expect, the exact year you plan to leave, and it will not survive contact with an actual market cycle any better than a house built for one kind of weather survives an actual Texas year.
The fix
You do not need a finance degree to ask better questions. You need to ask these:
- Ask what happens to the plan if the sale takes two years longer than expected.
- Ask what happens if you cannot work for six months during the process.
- Ask what happens if the buyer pool is thinner the year you actually list the business.
- Ask what happens if a spouse or partner wants something the plan never accounted for.
- Ask your advisor to show you the plan under a slower scenario, not just the expected one.
- Ask what the plan's probability of success actually is, not just its target number.
The point
The plans I trust most in hindsight were never the most optimistic ones. They were the ones built to bend. An owner who asks what happens if I am wrong, before signing anything, before assuming anything, gives their plan a chance to survive the version of the future that does not go exactly as expected. That is the version that actually shows up more often than not.
Frequently Asked Questions
What is the most important question to ask before selling a business?Not "what is my price," but "what happens to this plan if I am wrong about the timeline, my health, or the market." Most exit plans are built around one expected outcome. The ones that hold up are built to survive a different one.How do I know if my exit plan is realistic?Ask whether the plan has been tested against a slower sale, a lower multiple, or an unplanned pause, not just the outcome you are hoping for. A realistic plan has an answer for more than one scenario, not just the best one.What questions should I ask a financial advisor before I retire?Ask about their fiduciary duty, their credentials, and how they are compensated. The CFP Board recommends asking directly whether an advisor is required to act as a fiduciary and how they handle conflicts of interest, according toCFP Boardconsumer guidance. Also ask them to show you the plan under more than one scenario, not just the expected one.What does it mean to stress test a financial plan?It means testing the plan against a wide range of possible outcomes, different market returns, different timelines, different health events, instead of just one expected path. Financial planners often call the result a probability of success score, and most look for that score to sit at 85 percent or higher before treating a plan as solid.Why do business exit plans fail even when the numbers looked right on paper?Because the math was rarely the actual problem. Roughly half of new businesses do not survive to their fifth year, and the ones that do rarely follow a straight line to get there, according toBureau of Labor Statisticsbusiness survival data. Plans that only account for a smooth path are the ones most likely to break when the path is not smooth.
Work with Pinnacle Wealth Advisory
If you are within a few years of selling your business, or you already sold and want a second opinion on the plan for what comes next, it might be worth a conversation. We build plans around the question of what happens if you are wrong, not just what happens if everything goes right.Here is where to start.
This blog post is for informational purposes only and does not constitute legal, tax, or financial advice. Past performance does not guarantee future results. Consult with qualified professionals for guidance tailored to your specific situation. Doug may provide services and conduct business as Pinnacle Wealth Advisory with advisory services offered through SB Advisory, LLC.
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