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Is an Economic Crisis the Worst Thing That Can Happen to Your Clients’ Businesses?

Submitted by John Brown on Fri, 09/18/2020 - 8:00am

We ended our last post with a question: Do you have the skills, experience, and tools that owners need to survive an economic crisis and mitigate potential future losses? 

Have you offered owners creative suggestions or made insightful recommendations designed to grow their businesses? Perhaps you’ve suggested that they acquire struggling competitors or hire the high-performing personnel that are now available because competitors’ companies have spiraled into a nosedive.  

Have owners received your suggestions by engaging you or have your suggestions fallen on deaf ears? It’s natural to assume that owners would be open to trying new ideas and initiatives to address the challenges that an economic crisis creates. Natural, but often wrong. 

Robert Cialdini, Pd.D, author of Pre-Suasion: A Revolutionary Way to Influence and Persuade, points out that, “. . . when people are in a state of uncertainty, two things happen to their decision-making. First, they’re reluctant to change—they sit on the fence because they’re unsure of what to do. That’s the biggest mistake in the face of true opportunity. And they stay there until the uncertainty is reduced.” He continues, “People will prefer choices that protect against losses versus those that obtain gains.”

As Exit Planning Advisors, how can we overcome this reluctance to change and encourage owners to plan for the future? As Cialdini suggests, we must help them “protect against losses,” losses that exceed even those that an economic crisis can cause. 

Today, that risk is that owners could die in the midst of this crisis. Few businesses could survive the “double-whammy” of the economy and an owner’s sudden death. The most likely result is liquidation. 

If we are to gain engagements during times of uncertainty, we must alert owners to the magnitude of losses they could face if they fail to seize the opportunity to work with us to protect themselves and their families from the loss of their businesses. 

The most effective way to raise owner awareness is to help them develop Business Continuity Instructions (BCI) specific to their businesses and situations. BCIs explain what others should do if the owner dies, becomes disabled, or is unavailable for any reason. By completing the BCIs, owners create an Owner’s Manual for the continued operation of their businesses. They spell out an owner’s desires related to: 

  • The person who can assume responsibility for financial decisions. 
  • The company’s most important customers and vendors. It names the person(s) who should take the lead in communicating with each of them. 
  • The advisors who should be consulted. 
  • The future ownership of the business. 
  • The location of critical information that family, employees, and others will need to manage the business (e.g., passwords, documents, contracts). 

Most owners do not have a written plan in place to address their untimely deaths or incapacitation. The absence of such a plan is especially dire for sole owners. If sole owners die without creating Business Continuity Instructions, they leave their families and businesses scrambling to deal with business operations, personal debts, and the future of the business. Survivors are left to figure out how to prevent a business from dying along with the owner.   

BCIs not only help owners to protect themselves (and their families) from these greater losses, but also give them peace of mind. For these reasons, having these instructions is valuable regardless of whether owners wish to pursue Exit Planning. Of course, BCIs are a standard element of almost all Exit Plans and are typically created during the initial planning stages.  

In our current business environment, many BEI Members are discussing how they can help owners protect against losses (to owners and their families) that are even greater than those posed by an economic crisis. Members explain how they can help mitigate the double whammy of both an economic recession and an owner’s death. Specifically, they describe the benefits of creating comprehensive Business Continuity Instructions, as well as other planning strategies (such as funded Stay Bonus Plans for important employees in the event of an owner’s demise). Some Members provide owners with an example of the BCI to help owners appreciate the extent and thoroughness of these instructions (typically a 10- to 12-page document).  

BEI Members understand that approaching owners with solutions designed to protect their families from the significant damage that their untimely demise would cause is a “foot in the Exit Planning door.” Owners are able to appreciate the immediate value of working with advisors who recognize their need to protect against future losses. When these owners decide that they are ready to move forward with additional Exit Planning strategies, they turn to the advisors they trust . . . the ones who helped them protect them and their families from devastating losses.  


  • In difficult times, owners are more concerned with “protecting against losses” than with “obtaining gains.” Helping them do so often leads to Exit Planning engagements.  

  • Businesses are usually unprotected against the loss of an owner—especially a sole owner—through death or disability. The sad result is liquidation. 

  • Advisors can help owners protect against loss by introducing them to Business Continuity Instructions, Stay Bonus Plans and other tools and loss-mitigation strategies. 


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