Framing the Conversation About Exit Planning With Business Owners

Submitted by Elizabeth J Mower on Sat, 07/07/2018 - 6:00am
A man and a woman looking at a computer

A departure from the business is one of the most significant events of any business owner’s life. Most successful business owners have run their businesses for decades by the time they seriously consider retirement, and their financial independence—both for the present and future—is often tied to their businesses. These factors have significant effects on how owners can react when advisors approach them about Exit Planning. They also affect how advisors should go about framing the Exit Planning conversation with business owners.

When business owners start to think about exiting their businesses without any prodding from their advisors, Exit Planning Advisors often find two common traits. First, most owners have a distinct picture of how their exits will look in their heads. They may not have all the details set, but they often have good ideas for how they want to go out. Some want to sell their businesses to a world-class company and use the funds they receive to take care of family. Others want to transfer the business to family members or loyal employees who will pursue the same vision for the company that they had. But all have certain goals they want to achieve no matter what.

Second, when owners have decided to take the next steps toward exiting their businesses because they feel that they’re ready, most Exit Planning Advisors agree that those owners have waited too long to achieve all the goals they want in the time frame they’ve set. We’ve discussed it before: When owners wait to plan their exits until they’re ready to exit, they often find that their companies are not ready for their exits.

Given this common setup—where owners have big goals they must achieve but rarely have enough time to do it by the time they’re emotionally ready for an exit—it’s important for Exit Planning Advisors to know how to frame the conversation about Exit Planning with business owners. I found a good example of how an advisor does this in one of Austin Bransgrove’s interviews with ForbesBooks Radio.

In this interview, Austin talks a lot about how important it is for him to understand his business-owning clients and what they expect out of an Exit Plan. That’s at the heart of Exit Planning: making sure business owners exit on their terms. We find that to truly internalize this mind-set, advisors can do three things to help frame the conversation about Exit Planning.

Find Out What Business Owners Want Out of Their Exits

This may seem obvious, but finding out how business owners envision their ideal exits is a step some advisors miss. Unless advisors know how business owners see their business exits going, it’s impossible for them to offer strategies, ideas, or suggestions for how to get owners to where they want to be. There are proven questions that Exit Planning Advisors ask business owners to uncover what an ideal exit looks like to them.

Determine Why Owners Want What They Want

Knowing what owners want out of a business exit is the starting point, but learning why owners want what they want drives the implementation of Exit Planning strategies for advisors. Asking owners why they want to achieve certain goals helps owners articulate and prioritize their goals, making the creation of strategies and action items clearer and more efficient. Additionally, asking owners why they have certain goals out of genuine curiosity can help advisors uncover goals that owners didn’t even know they had or didn’t know how to articulate.

Don’t Let Expertise Get in the Way

At the end of the day, the most successful Exit Plans succeed because they are owner-centric. As advisors learn what business owners want from their exits and why, it can be tempting to rebuke or disagree with their goals.

For example, if a business owner states that she wants to transfer her business to her children because she feels that giving her children access to consistent income is the best way to fund her grandchildren’s college tuition, it might be tempting to suggest selling to a third party for a larger and more immediate lump sum. While that suggestion might make sense in terms of finances, it completely disregards the owner’s stated wants. Those wants matter to business owners and should be taken as seriously as other goals, such as financial independence.

Just because a business owner wants to take an Exit Path that the advisor wouldn’t necessarily take doesn’t make that choice wrong, especially if there are strategies that can make that Exit Path work to achieve the owner’s goals. While advisors should always use their expertise to make the best suggestions about Exit Planning, they should not use that expertise as a bludgeon to dissuade owners from their goals just because they would do things differently. This can be especially challenging when business owners place a premium on more intangible, values-based goals, but with the right tools, strategies, and networks, it’s entirely possible.

Taking business owners from where they are now to where they want to be when they exit requires advisors to genuinely internalize the Exit Planning Process. Advisors must understand what business owners want and why they want it. Understanding owners’ visions for the future is the best way to create and implement Exit Plans that allow business owners to leave their businesses when they want, for the money they need, and to the people they choose.

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