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4 Barriers to Entering the Exit Planning Market

Submitted by John Smith ChFC... on Fri, 02/28/2020 - 8:00am
Breaking Down Barriers

Every Exit Planning advisor starts somewhere. You may remember how frustrating and intimidating it was to first enter the market without a real client base. The good news for you is the Exit Planning market is currently thriving, with nearly 81% of business owners reporting they want to exit their businesses within the next 10 years. We also know that just a mere 21% of owners claim to have a written Exit Plan in place. Right now, the opportunities seem endless. 

Barriers to Enter the Market

There are several reasons why a business owner may not be willing to work with an Exit Planning advisor or begin the planning process just yet. Some business owners:

  • May not be ready to leave their business
  • Don’t think they need an advisor
  • Don’t understand what Exit Planning is or how it can benefit them 
  • Have cost and time constraints 

Barrier 1: Owner Is Not Ready to Leave

Let’s face it, business owners may not be ready to leave their businesses for any number of reasons. Often, the business ties directly to the owner’s identity and it is common for a business owner to feel lost or disoriented without their company. Many times, owners set specific targets when they started the business and they may feel as though those targets have not yet been met. These goals may be as simple as a value number or might be rooted deeper into thoughts about legacy or supporting a community.

On the other hand, owners may be ready for the next chapter of their lives but have no idea the timeline associated to a project like this. Many owners have the misperception that the process doesn’t need to be started until they are about 2 years out from their desired departure date.

When you approach these owners about planning, your marketing efforts, the information you give to them, and how you speak to them should revolve around their goals and desires rather than their exit from the business. Shifting the focus from an event to a desired outcome helps owners to feel a sense of urgency to begin the planning process. Most of these owners understand that Rome (or their business) wasn’t built in a day and therefore building what comes next won’t be either.

Barrier 2: Owner Doesn’t Think They Need an Advisor

Why would a successful business owner need an advisor? Business owners had an idea, built a business around said idea, and have been successfully growing and running it for years. Why does a business owner need someone to tell them how to leave what they built themselves? The good news is the owner with this belief does in-fact understand what it takes to accomplish the success they have today and therefore understand the importance of continuing that success for the company after they depart.

All business owners hire team members in the areas in which they are not strong in or simply don’t appeal to them. Your clients likely have a team of professionals such as a CPA, an attorney, an insurance advisor, and a financial advisor. Your role with these owners is to help them understand that, as their Exit Planning advisor, you will be coordinating this talented team of advisors just as they have coordinated the team they have built for their businesses.  More specifically, your role is to allow them to do what they do best while you focus the efforts of the advisor team on accomplishing the owner’s ultimate goals. New call-to-action

Barrier 3: Owner Doesn’t Understand What Exit Planning Is or How It Can Benefit Them

In the latest BEI Business Owner Survey, approximately 81% of owners wanted to stop working in their business in the next 10 years while only 56% said they wanted to have a transition event in the next 10 years. What this shows is owners believe there exists a difference in planning for an exit vs. planning to make their business self-sustaining.  And while this is partially true, a majority of the Exit Planning cases BEI sees are transfers to insiders or transfers of ownership over a greater period of time to those working in the business. This is often because the benefits an owner gains from planning years prior to “exiting” allows them to focus on goals other than a financial target and gives them the freedom to pursue outside passions.

When you can approach an owner and target your planning on what his or her ideal scenario is, you can take a phased approach to the planning. By planning one phase at a time, you can illustrate the benefits of each step rather than the transition event as a whole. Shifting the owner’s and your focus away from the end transition event and onto the benefits of having a plan for each phase sets you apart in the marketplace. 

Barrier 4: Owner Has Cost and Time Constraints 

The fact of the matter is, you will likely hear this objection most often and it is typically not the root of the hesitation. Most owners will spend any dollar amount if they believe it will provide a return. That said, the most successful owners are shrewd with their dollars. They make purchasing decisions based on logic, they hire based on whether or not they believe the employee will produce greater than what they cost, they invest in their business over and over should they feel that investment will grow the organization.

In addition to financial constraints, the owners you want to work with are more cautious with their time. They have a true understanding that time is more limited than any other asset. However, they will spend hours poring over data, days examining new strategies, and even years developing successors. Why is this? It is because they find value in the dollars spent and the time invested.

For these owners your role is simply to dig deeper. Most owners in this bucket sincerely don’t understand how what you do will help them accomplish their goals, which means the root of their objection lies in one of the scenarios outlined previously. Ask more questions, dig in to why he or she started the business, what they hoped to accomplish, what thoughts they have had about what the business looks like when they are not working 60 hours a week, or how they built their team. The more questions you ask, the better vision you will have on how to proceed.

Overcoming These Barriors is Only the First Step. What's Next?

Although we run into several challenges entering the market, there are always solutions to overcome them. As an advisor, your role is to come up with alternative solutions for your clients once you are faced with a problem. Now that you have some strategies on how to move into the next phase with those more challenging clients, you may be faced with the task of how to grow your client base. Tune in next week to learn best practices on how to expand your clientele after you create those first few relationships.  



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