Most mountain climbers don’t die on the way up, they die on the way down.

The rate of successful transition from one business owner to another is staggeringly low for a variety of reasons.The good news is that most deadly mistakes can be avoided with proper planning. But most business owners spend more time planning a family vacation than they do planning how to exit their business.

If you think owning a business is full of stress and emotion, exiting a business—especially a family business—can be even more fraught with emotional, personal, and financial pitfalls. Even worse, the fallout from failing to plan for a pre-mature death or disability of a business owner can be even more devastating.

Who wants to be in business with your late partner’s wife? Or her new husband? Or her new husband’s attorney? Or her new husband’s CPA?

In addition, failing to plan can result in the IRS ending up with more money than you do after the sale.

‍Example:Joe sells his business to Brad, a key employee, for $1,000,000. Brad must come up with approximately $1,640,000 for the sale because, at a 40% tax bracket, he’ll have to pay $640,000 to the IRS leaving him with $1,000,000 to pay to Joe. If Joe is in a 40% tax bracket, he’ll end up paying another $400,000 to the IRS in taxes—leaving the IRS with $1,040,000 and Joe with only $600,000!

This situation can be minimized with the right guidance and exit plan.

Part of an exit plan is knowing the current value of your business and knowing what adjustments can be made years before the sale to maximize the selling price.

A great exit plan addresses family dynamics between family members who are involved with the business and those who aren’t.

A great exit plan means you pay less taxes now and in the future. It means lowering or eliminating the risks of business succession. Great exit planning also brings guaranteed income during retirement.

The path on the way up matters. But the path on the way down, and when to start on that path, can be even more critical.