The Exit Planning Fallacy: A Business Owner’s Reality Check

Business owners hear this pitch all the time:

“I’ve reviewed your company and believe it’s worth $4.2 million today. With the right planning, it could be worth $7.7 million. Would you rather exit with $4.2 million or $7.7 million?”

It sounds compelling. And it’s not really a question—it’s a setup. Of course, no owner would choose the smaller number. But that isn’t the real decision. The real issue is what it takes to bridge that gap—and whether you’re being given the full, honest picture of the effort, time, and risk involved.

The Planning Fallacy at Work

There’s a well-documented psychological concept behind this kind of thinking: the planning fallacy.

It describes our tendency to underestimate the time, effort, and complexity required to achieve a goal—even when past experience tells us otherwise. One study captured the idea perfectly by observing academics who head home on Fridays with overflowing briefcases, fully convinced they’ll complete everything over the weekend. Despite knowing they’ve never done so before, they’re confident this time will be different. Business owners do the same thing.

We know how unpredictable growth can be. We know how long initiatives usually take. And yet, when someone shows us a big future valuation, we think, This time, it’ll work. All I needed was a plan. A plan is important—but it’s only the starting point.

What Actually Closes the Value Gap?

Let’s take that optimistic pitch and translate it into reality.

Growing a business from $4.2 million to $7.7 million in five years doesn’t happen because someone wrote a plan. It requires:

• Sustained annual growth of roughly 19%, starting immediately

• Strategic hiring and leadership upgrades

• Reinvestment of a meaningful portion of profits

• Consistent execution, year after year

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If you spend the first year laying groundwork—systems, people, process—you now need 25% annual growth over the remaining four years. If your best historical year was 7.5% growth and you maintain that pace, reaching the target would take more than 12 years.

Those numbers aren’t pessimistic. They’re math. And the reality is that very few owners achieve those growth rates without making significant changes—and without experienced advisors helping guide the process.

Perspective Changes Everything

Many owners already have good businesses. The company provides a solid income, supports employees, and carries a strong reputation. Maybe you’ve even imagined taking it further—but uncertainty, risk, or lack of a clear roadmap kept you from pushing harder.

That’s where the right advisors make the difference.

Not advisors who promise easy gains—but those who help you align:

• What you want to receive

• What you’re willing to do

• The timeframe you actually have

  
  

In our work, we use a Value Gap coaching approach built around four core elements:

1. Current business value

2. A clearly defined exit outcome (not just “more”)

3. Your desired exit timeline

4. The growth rate required to bridge the gap

Once the timeline and growth rate are put on the table, the conversation often shifts. It becomes less about the number—and more about tradeoffs, priorities, and feasibility.

The Real Fallacy

The real exit planning fallacy isn’t optimism. It’s believing that achieving your desired outcome is simply about choosing a bigger number.

It isn’t.

A successful exit depends on understanding the full picture—financially, operationally, and personally—and working with advisors who are willing to be honest, strategic, and clear about what it truly takes to get there.

Clarity doesn’t limit your options. It gives you control.

Content authored by John Dini, CEO of Exitmap