In my last post, "Why Business Owners Delay Exit Planning," we discussed what we know about owners:
- 80% believe that their business exits will come from planning and action items that they implement.
- 38% have taken no planning steps.
- 17% have created written Exit Plans.
When business owners told us these conflicting facts, we asked them what they were waiting for, and they were happy to tell us.
A decent chunk of business owners, 37%, said they’d take action once they were ready to exit, which we talked about in my prior post. But a full 53% of owners gave two similar but distinct answers for why they were waiting to begin their Exit Plans: 22% said they are “too busy,” and 31% said they have “more pressing issues” to manage.
One good sign that a business is unprepared for its owner’s exit is when an owner tells an advisor that he or she is “too busy to meet.” When a business owner is too busy to talk about converting his or her most valuable asset to cash, you can bet that the business lacks essential Value Drivers, especially a top-flight management team. Such a team bears the burden now resting squarely on the owner’s shoulders. Until that owner is free from that burden, his or her successful exit is improbable.
Advisors can argue about whether business owners really are too busy or have other issues that are more pressing, but that’s not the point. The point is that owners who feel they are too busy or too pressed for time will not respond to an advisor’s entreaties to discuss Exit Planning, no matter how compelling.
You might think that means advisors should simply write off over half the business owners they meet. That’s not the case. With the right framing, even the busiest owners can be amenable to Exit Planning overtures.
Removing the Busyness From the Business
If advisors have the skills, support, and persuasive arguments that directly respond to the concerns of busy, pressed business owners, they can turn them into Exit Planning clients. Likewise, business owners who pursue Exit Planning often find much more time to do the things they want, rather than the things they must. Let’s look at three ways owners and their advisors can remove the busyness from their businesses.
1. Exit Planning Frees Up a Business Owner’s Time
A central requirement of a successful exit is transferable value, which is the company’s value to someone else when the business owner is not present. If a business depends on its owner for success, no third party, key employee, or family member will buy it for what its owner believes is a fair price, if at all.
BEI Members explain this principle to prospective clients by defining transferable value as that owner’s ability to permanently leave the business with minimal disruption to the business’ cash flow. That conversation typically goes as follows:
Advisor: Can I ask you one question?
Owner: Just one. I’m busy.
Advisor: Can you leave your business for at least a month and know that it will run successfully in the hands of your management team, without checking in?
Owner: A month without checking in? How about just once a day?
This attention-getting conversation initiates a discussion of roles: Until business owners change their roles in their businesses from hub to spoke, their successful exits are, at best, unlikely. Owners who say they are too busy or hard pressed for time need to understand that successful Exit Planning relieves them of the burden of being all things to all people—employees, customers, and vendors—by default. With the right tools and processes, Exit Planners help business owners relieve that burden, time-effectively and cost-efficiently.
Usually, business owners are quick studies, and once they understand that their busyness is an obstacle to creating transferable value, they eagerly anticipate spending less time working—for the good of the business, of course.
2. Exit Planners Save Owners Time
One of the primary roles of an Exit Planner is to create time efficiencies that radically reduce the time business owners spend in meetings with advisors involved in the Exit Planning Process. Exit Planners coordinate the activities of all advisors, collect information from the client and involved advisors, and disseminate that information appropriately to other advisors. Because Exit Planners serve as the communication hub (rather than the owner), advisors can reduce the number of meetings business owners must attend by at least 50%.
In short, a core concept of Exit Planning is to reduce an owner’s indispensability and time commitment to the business permanently.
3. Exit Planners Are Efficient (and Can Prove It)
BEI Members have access to and training in BEI’s state-of-the-art Exit Planning software, EPIC, which provides them systems and processes to create unique Exit Plans for every business owner, regardless of Exit Path (third party—including ESOP—family member, or employee). This software acts as a project management system that keeps all advisors on task, presents a host of planning suggestions, and sequences the work each advisor must do.
It’s difficult to provide a comprehensive planning solution that saves owners time without using a process that is itself time-efficient and dedicated to creating transferable value. Fortunately, EPIC helps business owners and advisors make a business less dependent on its owner, freeing up the owner’s time to do the things he or she wants and needs to do to assure a business exit on his or her terms.
Next week, we’ll explore another common owner objection to engaging in Exit Planning: The company lacks sufficient value.