Most business owners don't plan their exit. They react to it. A health scare, a burnout, a surprise offer. And because they weren't ready, they leave hundreds of thousands of dollars on the table.
This guide is designed to change that.
Why Don't More Canadian Business Owners Have an Exit Plan?
Because nobody forces them to create one. And because running the business takes all their energy.
Here's the data:
- 58% of business owners have no exit plan at all (Project Equity). That number hasn't moved much in the last decade.
- 80% of business owners say they plan to exit within 10 years, yet only 30% have a formal plan (Business Enterprise Institute).
The gap between intention and action is enormous.
The result? 92% of small business exits happen through closure, not sale. The owner just stops. Locks the door. Walks away from whatever equity they'd built because they never converted it into something a buyer could evaluate.
That's not a business exit. That's a business burial.
If you're a Canadian business owner doing $500K or more in annual revenue, you've built something with real value. But value only matters if you can prove it, transfer it, and capture it in a transaction. That's what exit planning does.
What is Exit Planning, Really? (and What It Isn't)
Exit planning is not selling your business. That's a common mistake.
Selling is the last step. Exit planning is everything that comes before: 12 to 36 months of preparation that makes the sale possible, profitable, and structured in a way that minimizes your tax bill.
It includes:
- Getting your financials into shape a buyer will trust
- Reducing your personal involvement so the business runs without you
- Documenting processes, contracts, and customer relationships
- Structuring the deal to qualify for tax exemptions (like the LCGE)
- Aligning your personal financial plan with the proceeds
What it's NOT: a valuation report you stick in a drawer. A lot of business owners think they've "done" exit planning because they got an appraisal three years ago. That's one input. The plan is the whole system around it.
The Tax Paradox: Why Your CPA Has Been Working Against Your Sale Price
Here's something that surprises every business owner we work with.
For years, your accountant has been doing their job: minimizing your taxable income. Writing off your truck. Running personal expenses through the business. Maximizing deductions. Depreciating assets aggressively. That's smart tax strategy, and it saved you real money every April.
But it created a problem you didn't know about.
When a buyer looks at your financial statements, they see a business that barely makes money. Your net income is artificially low because your CPA designed it that way. The buyer sees $150K in profit when the business actually generates $400K in economic earnings.
The Tax Paradox: Your CPA minimized taxes, which made your business look less profitable to buyers.
This is what we call the Tax Paradox of exit planning. The very strategies that saved you taxes now cost you on your sale price.
Fixing this requires a process called financial normalization. You go through every line item and identify "owner add-backs": expenses that a new owner wouldn't incur. Your spouse's salary for a role that doesn't need filling. The family truck. The "business trip" to Costa Rica. Below-market rent on a property you own personally. Personal insurance running through the company.
Here's what that looks like in practice:
- Net Income (as filed): $150,000 on the tax return, $150,000 after normalization
- Owner's salary above market rate (included in expenses): + $80,000
- Spouse on payroll, no-show role (included in expenses): + $45,000
- Personal vehicle (included in expenses): + $18,000
- Personal travel (included in expenses): + $12,000
- Personal insurance (included in expenses): + $9,000
- One-time legal fees (included in expenses): + $15,000
- Below-market rent adjustment: + $24,000
- Adjusted SDE: $150,000 becomes $353,000
- At a 3x multiple: $450,000 sale price becomes $1,059,000 sale price
Same business. Same revenue. Same customers. The difference? $609,000 in sale price, just from presenting the financials properly.
And that's a conservative example. Cleaning up financials can move a business from 2-3x SDE to 4-6x EBITDA (Inte