In late 2019, Henry Frost decided it was finally time to do something about leaving his business. Like most owners, his goal was to exit within the next three to five years. Also, like most owners, he felt no urgency to move forward because his business running well.
Then an economic downturn arrived, moved in, and got comfortable.
Within 45 days, Henry’s monthly revenue numbers dropped 35%. With no relief in sight, Henry did not know how to move forward. His wife was more concerned about Henry than she was about the business. She didn’t know what to suggest, but she knew someone must have some answers.
“Henry, listen,” she started. “Somebody out there can help. What about your accountant, your lawyer, even your friendly competitor, Mark?”
Henry shook his head, “Mark doesn’t know any more than I do. As for my accountant and lawyer, if they had any ideas, I’m pretty sure one of them would have contacted me. No one has.”
Like millions of owners today, Henry faces potential financial ruin, stagnation, and a slow, multi-year recovery at best. He’s got to figure out what he can do to put his business back on track—and fast. He needs the services of someone who can advise him on the best courses of action and then help direct and guide those actions.
Who is that “someone” to provide advice? Not Henry’s current professionals—attorney, CPA, or financial advisor. Their primary role is not to advise. Like most professionals they are “task-specific” rather than “advice—providers.”
“An adviser's role is that of a mentor or guide and differs categorically from that of a task-specific consultant. An adviser is typically part of the leadership, whereas consultants fulfill functional roles"
Given the distinction between the two, it’s clear that most professionals don't advise, and they don't earn fees by advising. Any advice they offer is usually limited to the task at hand—a tax return, employment agreement, investment vehicles, etc. Owners and businesses require this ongoing representation in the normal course of business.
But during periods of uncertain change, when business, personal and exit goals are on lockdown, owners need much more. They need a professional who provides planning advice to address and resolve today’s challenges. They need professionals who can guide them and their businesses out of the doldrums. They need professionals who can create an action plan based on their advice as well as that of other involved advisors. They understand that they must develop and act on a plan to strengthen and protect their companies or face years of stagnation or worse.
For most owners, this is a radically new appreciation for planning. In normal times, owners like Henry are so focused on day-to-day business, that they have little interest in (and claim to have not time for) planning.
During times of economic crisis, owners find that their complacency is shattered. Owners have to plan; they must act, and they know it. Unfortunately, the professionals they work with on a routine basis are task-oriented and are offering little or no planning advice.
This silence on the part of professionals and sense of urgency among owners presents a great opportunity for planning-oriented advisors to differentiate themselves, grow their practices, and help owners benefit from their lives’ work.
By helping owners create and act on plans to address current challenges, advisors can be immensely helpful to struggling owners and their businesses.
The Challenge: Do You Know How?
In our next post, we’ll return to Henry to see how his advisor—a true planning advisor—grabbed the opportunity to address Henry’s economic-caused business challenges.