Planning for Life After Business: Achieving Your Freedom Point

Spring marks the peak selling season— and a time to dream about the future. For many horticulture business owners, 80–90% of their net worth is tied up in their business. Yet, according to the 2024 State of Succession and Exit Planning in the Horticulture Industry survey, 54% of owners lack a formal business valuation. To turn your retirement dreams into reality, you need to determine your Freedom Point— the moment when selling your business provides enough resources to sustain your ideal lifestyle.

Understanding Your Freedom Point

Your Freedom Point is unique to you. It represents the financial threshold at which selling your business generates enough cash to maintain your desired lifestyle. To determine your Freedom Point, consider these three key factors:

1. Current Business Value – What is your business worth today?
2. Financial Needs – How much do you need for a comfortable retirement?
3. Value Gap – The difference between your business’s worth and what’s needed to fund your future.

Start by adding up your savings, including investments and retirement funds, and estimate your expected proceeds from selling your business. The net proceeds from the sale will depend on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). The EBITDA multiple determines the price a prospective buyer may offer. Next, calculate your anticipated post-retirement expenses, including everyday costs and bucket-list goals, up to age 95 (gulp). Unlike your grandparents, if you live to 75, there’s a good chance you’ll reach 95. Lastly, you will need to pay 5–15% in transaction costs and advisor fees, and expect to pay Uncle Sam his share using your current tax rate. What remains after subtracting your expenses, retiring any remaining debt, transaction costs, and taxes is your Freedom Point!

Sounds simple? It’s not. To quickly estimate your Freedom Point, use the complimentary online Freedom Point Calculator: CLICK HERE!  It takes less than 10 minutes and provides a full, confidential report.

The Importance of Early Planning

Many business owners delay exit planning, but starting early provides flexibility and control. Preparing years in advance allows you to increase profitability, strengthen management, and improve operational efficiency. A rushed sale often leads to lower valuations, fewer buyer options, and missed financial opportunities. Think of your exit strategy as an evolving process rather than a last-minute decision.

Strategies to Maximize Business Value

The pool of potential buyers in the horticulture industry is limited. How can you make your business stand out? Achieving your Freedom Point requires preparing your business for a profitable sale. Focus on these 10 essential steps:

1. Get a Business Valuation – Obtain an independent valuation to understand your business’s current worth. Be prepared to share at least three years of financials and tax returns.
2. Increase Profitability – Optimize sales and cost efficiencies to enhance earnings. A clear sales growth strategy sets your business apart from others on the market.
3. Organize Financial Records – Ensure key financial statements and tax returns are accurate, up to date, and easy to explain. Separate non-recurring expenses, such as bonuses or personal costs, to present true profitability.
4. Improve Cash Flow – Minimize large expenses unless they are mission-critical. Buyers don’t want to make significant investments on day one of ownership.
5. Strengthen Your Management Team – Reduce owner centricity by developing strong internal leadership. A management team capable of running the business without you makes for a smoother transition.
6. Diversify Revenue Streams – Mitigate risk by expanding your customer base and product offerings to reduce dependency on a few large customers or products.
7. Document Standard Operating Procedures – Well-documented processes decrease owner dependency, increase business value, and simplify the transition to a new owner.
8. Enhance Customer Loyalty – Loyal customers are valuable assets to potential buyers. Know your Net Promoter Score (NPS)—if it’s below 9.0, fix it. Strong customer relationships add significant value.
9. Develop a Clear Exit Strategy – Exit planning is a team effort. Involve professional advisors, your management, employees, and family to plan your transition well in advance.
10. Address Legal and Compliance Issues – Anticipate issues surfacing during due diligence. Resolve outstanding contracts, licenses, and legal matters to avoid roadblocks during a sale.

When done properly and in a timely manner, these steps help bridge the gap between your business’s current value and the amount needed to fund your future lifestyle, ensuring you achieve your Freedom Point.

Your business is your legacy. Plan ahead, maximize its value, and secure the future you’ve worked so hard to build.