Ask business owners whether their businesses are growing fast enough, and the answer will likely be no. That answer presents problems for both owners and their advisors.
The Value Problem for Owners
Problem 1: Put simply, most owners will not attain their long-held goals and aspirations for their businesses and themselves unless they own valuable companies.
Problem 2: One or more roadblocks impede their efforts to grow business value.
The Value Problem for Advisors
Problem 1: BEI’s surveys of owners tell us that most don’t ask their advisors for ideas and help to overcome their roadblocks to growth.
Problem 2: We believe that few advisors (unless they are business consultants) reach out to help their owner clients grow business value because our professional training did not give us the tools to help them address their greatest challenge: grow their companies at the pace necessary to achieve their dreams.
The Question for Advisors
What will it mean to you and your owner clients if you did acquire the knowledge and skills to help them to grow business value, minimize business risk, reduce taxes, and reach their goals and aspirations?
- You will create a strong differentiator for your practice.
- You will also create a revenue source that supports the growth of your practice at the pace you would wish to attain.
- Most importantly perhaps, you will make a measurable difference in the lives of your clients. Let’s talk about that in more detail.
Differentiate Your Practice to Make a Difference
Once you acquire the tools to help your clients build business value, there are four steps to differentiating your practice:
Step 1: Identify the value roadblocks that keep your clients up at night.
Step 2: Tell them how you can help them overcome a single roadblock.
Step 3: Engage to work with them to address the single roadblock.
Step 4: Repeat.
Step 1: Identify the Problem
When we ask owners to identify their biggest value-building challenge, some can give an immediate response. For others, we’ve found that a short, simple assessment both introduces owners to the most common roadblocks and helps them point us to their most pressing concern. Most of BEI’s Members use short-form assessments at their initial meetings with owners. One such assessment statement is:
“The current value of my company meets or exceeds the value I’ll need to retire comfortably.” Please indicate your level of agreement using 0 1 2 3 4 5 with zero meaning you strongly agree and five meaning strongly disagree.”
Step 2: Offer to Overcome the Problem
If owners indicate that business value is inadequate (0, 1, 2 or 3), Members ask:
- What steps are you currently taking to grow value?
- If value is not growing fast enough for you to reach your goals, what are you doing to increase the pace of growth?
- Would you be interested in learning about some ways I can help you to increase value more quickly?
Step 3: Address the Problem
We’ll be discussing specific actions you can take to help your clients increase business value in future posts. It is central to much of the effort and work Exit Planning Advisors undertake.
Step 4: Repeat
Once an owner’s most pressing issue is resolved, BEI Members move on to an owner’s next issue. This helps create momentum and alleviate the overwhelming stress of trying to assess all problem areas of the business at once. Focus your efforts on one roadblock at a time.
Value Conversations Lead to Engagements
Asking owners direct questions about the issues that prevent them from growing business value (and by extension achieving their most important goals) has immediate benefits including:
- It demonstrates that you are more than just a CPA, financial advisor, or attorney focused solely on traditional representation: You are interested in your clients’ well-being.
- You are different than your competitors because you have initiated a conversation that few owners ever have with their existing advisors.
- These conversations about value lead to engagements.
Of course, you must have the knowledge necessary to discuss and recommend designs and tools that drive business value. Over the course of the next few weeks, we will discuss the topic of understanding and recommending specific Value Drivers.
- Think of your profession for a moment. What tools or training does your profession give you to help owners grow their businesses?
- Asking owners to identify the roadblock that prevents their companies from growing at the pace they desire is a conversation they’ve likely never had before.
- The ability to suggest specific ways to increase business value is a key, perhaps the key, to differentiating your practice from your competitors.