Are You Ready to Exit Your Business?

By Jay Chang, VP, Wealth Advisor

Last updated July 6, 2026

What Does the Business Exit Readiness Scorecard Measure?

It measures how prepared your business is for a sale or transition, scored 0 to 100 across four dimensions: Financial, Operational, Tax, and Succession. Ten questions, about 60 seconds, and you see exactly which dimension is dragging the score down.

The score is not a valuation. It reflects the same readiness framework I use with business owners planning exits, and it points at the work that usually raises the eventual price: clean books, a business that runs without you, a tax structure decided early, and a named successor or buyer path.

Why Does Exit Readiness Matter Years Before a Sale?

Because buyers price risk, and most readiness gaps read as risk. The gaps I see cost owners real money at the table:

• Owner dependence. If revenue walks out the door when you do, buyers discount the price or tie it up in an earnout.
• Customer concentration. A handful of accounts driving most revenue turns into a diligence problem and a lower multiple.
• Commingled financials. Personal expenses in the business books force buyers to guess at true earnings, and they guess low.
• Tax structure decided too late. Asset vs. stock sale, installment timing, and entity choices are set before signing. After close, the tax bill is history. For Arizona owners, I walk through the full sequence in business exit planning in Arizona.
• No successor path. Family, management, or third party: each exit route takes years to prepare, and having none prepared means taking whatever shows up.

I work with owners on the personal side of the exit too: what the proceeds need to fund, how the sale fits the retirement plan, and what changes the year before close. That is the core of my work with business owners.

How to Use This Scorecard

1. Answer the 10 questions covering your financials, operations, tax planning, and succession picture. Answer honestly, the score is only useful if the inputs are.
2. Read your overall score out of 100 and your readiness tier. The tier matters more than the exact number.
3. Check the four category bars. Your lowest category is usually where the most value leaks in a sale.
4. Act on the top three 90-day actions generated from your weakest categories. Put dates on them.

Exit Planning Questions I Hear Most

When should I start planning my business exit?

Earlier than feels necessary. The moves that add the most value, cleaning up financials, reducing owner dependence, diversifying the customer base, and structuring the sale for taxes, each take years, not months. Starting while a sale is still hypothetical gives you options. Starting after a buyer appears mostly gives you concessions.

What does the scorecard measure?

Ten questions score four dimensions. Financial readiness asks whether your books and personal plan can withstand diligence. Operational readiness asks whether the business runs without you. Tax readiness asks whether the sale structure has been planned. Succession readiness asks whether a transition path exists. Each dimension is worth 25 points toward a 100-point score.

What makes a business hard to sell?

The most common problems are owner dependence, where the business is really a job with staff; customer concentration, where a few accounts drive most revenue; and messy financials that mix personal and business expenses. Buyers price each of these as risk, which shows up as a lower multiple or a longer earnout.

How is a business sale taxed in Arizona?

Arizona taxes individual income, including most business sale gains, at a flat 2.5 percent rate, one of the lowest in the country. Federal tax is usually the bigger lever: how the deal splits between asset and stock sale, capital gain and ordinary income, and cash and earnout matters far more than the state line. Structure is decided before signing, not at filing.

Is my scorecard result a business valuation?

No. The score measures readiness, not price. It reflects commonly accepted exit planning practices, not an appraisal of your company. A valuation requires real financial analysis and market comparables. The scorecard tells you where to focus so that when you do get a valuation, the number is one you like.