Avoiding Conflicts Between Business Owners and Advisors

Thu, 06/07/2018 - 06:00


For business owners, exiting their businesses is one of the most emotional events they’ll ever encounter. Even the most cold-blooded, steel-hearted owners often must confront how exiting their businesses affects them emotionally, whether that means handling a sense of euphoric joy, stifling fear, or impatient anger. When combined with business owners’ entrepreneurial mind-sets and inherently rebellious natures, advisors can find themselves in the middle of a tinderbox. That’s why they need to remember three things to keep the Exit Planning Process moving forward with minimal conflict.

Advisors Work WITH Owners, Not For or Against Them

This may seem obvious, but Exit Planning Advisors must remember that, as leaders of the Exit Planning Process, they are responsible for positioning their business-owning clients to exit their businesses on their terms. This means that the owner’s goals, wants, and needs will guide the Process from beginning to end.

However, this does not mean that Exit Planning Advisors must say “yes” to every single want the owner has. Exit Planning Advisors typically have two sets of expertise: Their expertise in Exit Planning, and their expertise in their core line of work. They must leverage this expertise diplomatically and know how to explain to owners which parts of their goals are realistic.

For instance, if the owner of a 10-employee paper company that’s worth approximately $1 million and has no management team says, “I want to leave my business with $10 million cash in hand in five years,” the Exit Planning Advisor must be able to explain what’s more realistic and why that want is probably unattainable.

At the same time, Exit Planning Advisors cannot swing too far in the other direction by belittling or stamping out an owner’s goals. When business owners present unattainable goals, it’s important to not let years of experience or expertise come off as patronizing.

Using the same example of the paper company, it might be tempting for an Exit Planning Advisor to say, “I can’t do that for you” or “That’s simply not possible” right out of the gate. Given how emotional planning for a business exit can be, coupled with the continued stress of running the business, owners may interpret this truthful statement as an attack on their thoughts, goals, and hopes.

Exit Planning Advisors know how to find the happy medium of working with business owners. Instead of constant yes’s and no’s, they ask probing questions, try to find out why business owners think they want and need what they say, and vest themselves in a successful business exit for their clients.

What Advisors Want Does Not Matter

In our experience, Exit Planning Advisors tend to come from transactional professions. Coming into Exit Planning with a transactional mind-set can be a shock to advisors’ systems, because for most of their careers, they’ve provided useful services that benefit themselves when it’s all said and done. They use strategies they’re comfortable with, do what they think is best for their clients, and ultimately aim for achieve their own goals.

Exit Planning requires that advisors focus on their business-owning clients’ goals over their own. That’s what we mean when we say that Exit Planning is owner-centric.

Exit Planning Advisors know that they must achieve their clients’ goals, even if those goals don’t line up with what the advisor had in mind. For example, an advisor might know that an owner who sells to a third party can make a couple extra million dollars from the sale and sell it more quickly, which may translate to extra money in the advisor’s pocket. But if that owner decides that she wants to transfer the business to her children because that’s what will make her exit successful in her eyes, the advisor must respect that and work toward it.

Again, Exit Planning Advisors, as experts, can and should use discretion. While the advisor must respect and work toward the owner’s goals, the advisor must also steer owners away from bad decisions. Using the above example, if the owner wanted to sell to her children but doing so would not allow her to exit with financial security, her Exit Planning Advisor would need to explain that to her and encourage her to consider other options.

The Exit Planning Advisor Drives the Process

Once Exit Planning Advisors have a strong sense of what their business-owning clients want, they must begin moving the Process forward. Whether that means assembling an Advisor Team, beginning to install Value Drivers, or otherwise, Exit Planning Advisors serve as the engine that moves the Process forward. They hold other advisors on their Advisor Teams accountable and proactively keep their clients up to date on all progress.

In short, business owners should not have to chase an Exit Planning Advisor down to find out where everyone is in the Process. That’s one of the biggest fears owners have about the Exit Planning Process, so Exit Planning Advisors must reassure them that they will not have to do that. It’s at the very heart of their value proposition.

Business owners are used to acting as the fulcrum in everything that they do. Exit Planning Advisors take some of that weight off their shoulders while simultaneously helping them exit their businesses how they want. By working with their clients, putting their clients’ wants before their own, and acting as the Process’ engine, Exit Planning Advisors can avoid conflicts with their clients and assure that everyone—from their clients, to their Advisor Teams, to themselves—reaps the benefits of a successfully implemented Exit Plan.