Business exit plan, Larkspur and Loaf Cafe
Business exit plan template with options, valuation and timeline
A business exit plan has to choose a way out, show what the business is worth and why, and list what must change before a buyer will pay that price. This five page plan for a cafe owner selling in mid 2029 compares five exit options, works from $200,000 of adjusted earnings to a $550,000 target, and sets readiness actions, a timeline, advisers and the net proceeds.
The document, page by page
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Section by section
What each section is for, so you can keep the ones you need and drop the rest.
- Cover
- Spine cover with the cafe, the plan and its date.
- 1. The goal
- Target sale date and price, and why owner dependence matters.
- 2. Exit options compared
- Five options with price range, time to exit, for and against, and a preferred route.
- 3. What the business is worth
- Adjusted earnings of $200,000, the multiple and six value drivers.
- 4 and 5. Readiness actions and timeline
- Nine actions with effect on value and a three year timeline.
- 6 and 7. Advisers and net proceeds
- Five advisers, what a $550,000 sale leaves, and what happens if plans change.
How to adapt this document
First, ask your accountant for adjusted earnings for the last three years and use the trend, not one good year, to set the target. Second, swap the value drivers for your trade: a service business may weigh contracts and staff retention, a shop its lease and stock turnover. Third, if you plan to pass the business to family rather than sell it, keep the options table and readiness actions but replace the valuation with how ownership will transfer and how other family members are treated fairly.
What makes this document work
The price is built, not hoped for
Net profit of $96,000 becomes adjusted earnings of $200,000 once the owner's salary, car, a one off repair and loan interest are added back. At 2.0 to 2.5 times that, the cafe is worth $400,000 to $500,000 today; the $550,000 target needs earnings near $250,000, which is what the readiness actions aim at.
Every action names its effect on value
The readiness table says whether each action raises earnings, the multiple, or removes a buyer objection: a new five year lease lifts the multiple, cutting wages to 31% of sales lifts earnings, replacing the nine year old coffee machine removes an objection. Nothing on the list is busywork.
It shows what the owner keeps
A $550,000 sale leaves $438,000 after a 4% broker fee, the fit out loan, fees and estimated tax. The plan also notes that a sale to the manager saves the fee but may leave $100,000 owed over three years, so the owner can judge both routes against retirement needs.
Questions people ask
What are adjusted earnings and why do buyers use them?
Adjusted earnings are the profit a working owner actually takes from the business once personal and one off costs are added back, such as the owner's salary, a car run through the books or a single large repair. Buyers price small businesses on them because they show what the buyer will earn, not what the tax return reports.
How long before selling should an exit plan start?
Two to three years is common for a small business. Buyers want to see at least a full year, ideally several, of figures with the owner less involved, and things like a new lease or a trained manager take time. Starting earlier also leaves room to wait out a weak trading period instead of selling into it.
Should I sell to my staff or on the open market?
Selling to a manager or staff member gives continuity and can be quicker, but they often need finance, which may mean the seller lends part of the price. The open market through a broker usually brings the best price but costs a fee and risks staff hearing early. Many owners offer staff the first chance with a deadline, as this plan does.
What lowers the value of a small business at sale?
Common factors are a short lease, an owner the business cannot run without, messy or unreliable records, falling sales, high wage costs and old equipment a buyer must replace. Each is listed in this plan with where the cafe stands today and what a buyer wants to see, which turns a valuation into a to do list.
Is the sale price what the owner receives?
No. Broker fees, legal and accounting costs, repayment of business loans and tax on the sale all come out first, and stock is often added on top at cost. Working out the net figure early, as section 7 does, tells the owner whether the target price is enough to retire on or whether the plan needs a different goal.
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