Every day, business owners across Minnesota wake up and go to work, focused on the immediate challenges of running their companies. They’re leading employees, managing supply chains, meeting customer demands, and troubleshooting equipment issues. What many aren’t doing — but should be — is preparing for the sale of their company.
More than half of all privately held businesses in America now have owners over age 55, according to the U.S. Census Bureau; many of those owners will be ready to retire in the next 10 years. Harvard Business School says this “silver tsunami” of ownership change could have a huge impact on the economy because many owners have no succession plan.
Steve Haarstad, an Enterprise Minnesota business growth consultant who has earned the Exit Planning Institute (EPI) Certified Exit Planning Advisor designation, says two dynamics are behind the lack of planning: time and trepidation.
“Their primary reason for not preparing a formal exit strategy is that they are consumed by other aspects of the business. They don’t feel like they have time. The other issue is a little bit of fear about what they will do and be after they sell their company,” Haarstad says.
That reluctance has broad implications. With a significant portion of business wealth concentrated in the hands of baby boomer owners, many companies — and their employees and communities — face an uncertain future.
The EPI estimates that approximately 50% of business transitions occur because of unforeseen events, including death, divorce, and disability. Without proper planning, these sudden transitions can devastate both the value of the business and the financial security of the owner.
But with the right approach and sufficient lead time, business owners can create successful transitions that preserve their companies’ legacies, protect their employees, and secure their financial futures.
First steps
For many business owners, the biggest obstacle to exit planning is not knowing where to start. The process can feel overwhelming, especially for those heavily involved in managing daily operations.
Doug and Jenny Leaser, both 55, operate Minnesota Waterjet, a Ramsey-based waterjet cutting company that uses an ultra-high-pressure stream of water to cut through nearly any material, producing precision parts. It’s the classic Minnesota manufacturing success story.
Doug brought hands-on experience from working on the production floor at another waterjet cutting company when they started their firm in 2003. Neither had any formal training managing a business; Jenny handled most of the office work and they learned as they went. Today, Minnesota Waterjet employs 18 people and operates out of a state-of-the-art facility.
“You’re kind of fumbling along, learning things, and the years go by,” Jenny says. “All of a sudden one day you think, ‘How much longer are we going to do this?’”
An announcement about an Enterprise Minnesota seminar on exit planning crossed their radar at just the right time. With some persistence from Jenny, they attended the seminar and later approached Haarstad to help guide their succession planning.
He walked them through the “three-legged stool” of exit planning: business planning, personal planning, and personal financial planning. “Steve gave us a road map,” Jenny says. “It was a place to start, and it gave us an idea of what we needed to be thinking about.”
The first step for any business owner, Haarstad says, is a mindset shift. “Almost like Alcoholics Anonymous, the first step is admitting you have a problem — recognizing that you need to get serious about planning,” he says.
Next, business owners should start educating themselves. This includes having conversations with advisors and other business owners, attending workshops, and reading books and articles. “Exit planning is a team sport,” Haarstad says. “There’s not one person or one advisor out there who knows all the answers and can help an owner with every aspect of planning. You need support from a good financial planner, a good attorney, and a good CPA — just at the basic level.”
Business planning: Boosting value
While all components of the three-legged stool are both intense and indispensable, the business leg often takes the most time. And getting it right helps owners maximize sale price.
“The business side — getting it ready, understanding the drivers, and building it into an attractive buy — was the most difficult,” says Mary Jo Harris. She and her husband Tim built Harris Hardwoods into a thriving manufacturer of hardwood cabinet components, mouldings, edge-glued panels, and specialty millwork for the kitchen and bath industry.
The exit process took the Harrises approximately five years, from initial planning to final sale. They assessed their business operations and worked to ensure revenue was strong and consistent. They developed plans for future sales and identified key employees and put retention bonuses in place so they would stay with the company during and after the transition.
“Once we had a process laid out in front of us and we could follow through these steps, that was a relief. We had a plan and we just had to follow the steps,” says Harris. Despite the demands on her time, Harris committed to the process, which ended with the successful sale of the company. She was particularly pleased that the process led to a buyer who would keep the business in Foreston and retain its employees.
One of the ironies of exit planning is that many business owners put it off because they don’t feel they can spare the time. “The truth is that good exit planning, especially business planning, increases value and improves operations as much or more than any other business-related exercise,” Haarstad says.
He lists the actions companies can take to improve business operations and boost their potential sale price.
Clean financials. Financial records should be organized according to generally accepted accounting principles so they’re easily understood by outsiders. Remove personal expenses that have been run through the business. It’s normal for the business to pay for a phone, insurance, or a company vehicle. Prospective buyers who see questionable expenses like vacations, personal property, or event tickets, as examples, start discounting the price or walking away entirely, Haarstad says.
Strong cash flow history. Demonstrate that the business consistently generates money. This provides tangible value for prospective buyers and proves the business model works. Companies with inconsistent revenue or excessive expenses should work over time to develop steady cash flow.
Leadership depth. An owner doesn’t need to be completely hands-off, but the business should operate well with the leaders who will remain after the sale. Help managers become strong leaders and good decision makers when the owner is away.
Documented processes and systems. Companies should have reliable, documented processes rather than running on tribal knowledge — the information locked in people’s heads. “If a key employee wins the lottery and leaves, well-documented processes will enable you to train someone else relatively quickly to follow established procedures,” Haarstad says.
Certifications and standards. Consider seeking certifications like ISO that make the business more attractive to buyers. ISO certification helps position the business for sale and improves internal operations, as Brent Cochran, owner of R/C Machining Company, Inc. in Glenwood, learned.
“One of the first things we tackled was making the business attractive to a potential buyer,” he says. “We didn’t really have any customers asking for ISO 9001 at the time, but it turned out to be a real benefit to the way we operate internally too.”
Personal planning: Running toward something
Business owners often find the personal components of exit planning can prove to be revelatory — and sensitive.
“It was uncomfortable,” Jenny Leaser says. Haarstad asked the couple to prioritize their values and think about their future goals, including their desired lifestyle after the sale, which they hadn’t discussed in detail and didn’t necessarily agree on. “It was good to get it out there because we have always talked about this but would always wind up lost in the weeds,” she says.
Haarstad nudges owners to articulate concrete plans rather than vague notions of travel or hobbies. “It is good to identify and recognize some hobbies — picking up your guitar again or working on cars in your shop,” he says, but adds that in many cases boredom quickly sets in.
Studies show that approximately 70-75% of sellers experience seller’s remorse after exiting their businesses. “They found themselves lost, with nothing to run toward,” Haarstad explains. “They realized how much of their identity came from owning and running that business.”
More thorough personal planning can help owners avoid that outcome. It might involve exploring other options such as starting or working with a nonprofit organization, beginning a retirement career in consulting or coaching, or launching a dream business. The key is having a plan that provides purpose and direction.
R/C Machining’s Cochran plans to spend more time playing in local bands. He plays guitar, piano, and sings in several groups now but would like to devote more time to it. He also thinks he might like to continue working, possibly on a part-time basis, for the new owners of his company.
Haarstad suggests including spouses or significant others in these conversations. He recommended that the Leasers schedule quarterly spousal retreats — booking a short getaway somewhere and going through an agenda related to their exit plan — away from phones and work distractions.
“Having those moments when it’s just the two of us without other things going on is very good. It is amazing the things you can talk about,” Jenny Leaser says.
A personal plan will help owners find something to run toward, decreasing the odds of experiencing remorse after selling their business. It also helps inform the personal financial planning portion of the strategy, giving a clearer view of the resources needed to support their future.
Personal financial planning: Closing the wealth gap
Owners who have mapped out a vision of their post-sale lives are better equipped to forecast their future cost of living, Haarstad says. Knowing those financial needs, they can determine what the business sale price must be to support that lifestyle.
“Financial planning helps owners identify their ‘wealth gap,’” Haarstad says.
Consider an owner who needs $5 million in total investments to fund retirement. If today he only has $1 million in investments outside the business, the exit planning strategy will aim to close that $4 million gap.
This calculation then informs the valuation target of the business so that after the sale and the taxes are paid, the net benefit will close the gap. If they have a business valuation in hand, owners can determine if they are ready to sell or need more time to build value.
Personal financial planning also highlights the importance of tax strategy. Working with wealth advisors and CPAs, owners can structure the sale to minimize tax consequences. This becomes especially important given that most business owners have limited assets outside their companies.
“Data proves that for the majority of business owners, 80% or more of their personal wealth is tied up in the business,” Haarstad says. “That just shows how critically important doing it right becomes.”
Key lesson: Start early
The wealth gap analysis also reveals the consequences of poor planning, especially when unforeseen events force a sale. “If you haven’t done any planning beyond traditional estate planning, and something happens, the business will transition to the designated beneficiary, in many cases the spouse of the owner,” Haarstad says.
Often, an owner’s spouse hasn’t been involved in the day-to-day operations of the company and has no idea what to do with it. That situation can put the business on a fast track to sell without allowing time to drive up its value. “They end up taking a haircut on what they could have gotten and paying more taxes than they needed to. It’s a lose-lose,” he says.
For the Harrises, an early start gave them clarity about their preferences for a buyer. “In the end we wanted to sell to a private entity much like ourselves. We knew we were kind of limiting ourselves, but we wanted to protect our employees.”
The process still proved demanding. “The last nine months were overwhelming,” she admits. “But having gone through the succession planning process, we had a plan and steps to follow. It was comforting to know we weren’t starting from scratch.”
The sale to Menzner Hardwoods, a family-owned company based in Wisconsin, closed Sept. 2, 2025, with Harris Hardwoods continuing to operate in Foreston and keeping the Harris name. Harris stayed on through November to ensure a smooth transition, fulfilling her goal of protecting the employees who had become like family over the years.
“They spent a lifetime building it,” she says of their employees. “We wanted to know that their jobs are protected when we’re gone, and the business continues.”
Companies that plan their exits also protect themselves against unforeseen circumstances, as Cochran learned.
R/C Machining was in excellent financial shape four years ago — an ideal time to sell. “The problem was, I wasn’t personally ready to sell at that time,” he says. The manufacturing economy declined around that time, and the company lost significant market value. That turned Cochran’s four- or five-year plan into a seven- or eight-year plan as he works to rebuild the value of the company.
His experience underscores why starting early matters. A longer runway gives an owner more flexibility for both personal readiness and favorable market conditions.
Doug Leaser adds that getting an earlier start on exit planning would have strengthened every aspect of their business. “I wish we would have started this a long time ago,” he says. “There are a lot of things we would have done differently, and we more than likely would have been more profitable in certain areas. Whether it’s year one or year 20, I think going through this process is very valuable.”
Return to the Spring 2026 issue of Enterprise Minnesota® magazine.
