According to BEI’s Business Owner Survey, about 80% of owners want to exit their businesses within the next ten years. Most of those would leave today if they were assured financial security. Our survey results also reveal that less than 20% of owners have taken any steps to develop any kind of a plan to exit, yet 80% recognize the need to plan and act if they are to exit successfully.
These findings make it clear that owners will continue to do little, if anything, to secure successful business exits unless advisors intervene. But to intervene we must first persuade owners that they need to act now to begin to plan their exits, and that we can help them do so.
If you ask most business advisors what they’ve found to be the most difficult aspect of introducing the topic of Exit Planning to business owners, the reply is some variation of “Getting their attention!” Sound familiar? Advisors who have developed successful Exit Planning practices understand that:
- They must prime the Exit Planning pump (i.e., attract and engage successful owners) and once primed, the pump needs to stay primed. BEI Members do this through the use of blogs, newsletters, speaking engagements, webinars, ect.
- The primary reason it is difficult to focus a business owner’s attention on Exit Planning is that owners don’t think they need to plan, at least not right now.
These advisors understand the reasons owners believe they can put off planning and use that knowledge to attract their attention and engage them in planning relationships.
Know Your Enemy
Here are three of the most common misperceptions that allow owners to blissfully ignore planning their business exits.
Misperception 1: They Are Too Busy To Plan.
Justifiably owners focus their time and energy on the fires or challenges of the day. In their minds, their business exits are far, far in the future (well, not this year, anyway), so—unjustifiably—they figure that they’ve got plenty of time to plan. It is a waste of time to tell owners how you can help them plan for some distant event years down the road. Instead, tell them that you can help them deal with today’s business challenges. That gets their attention.
Misperception 2: They Don’t Need To Begin Planning Their Business Exits Just Yet.
Many owners believe that an Exit Plan is simply a document that they will create when they are just about ready to leave their companies. They miss the fundamental purpose of Exit Planning: to enable owners to leave their companies on their terms.
In most cases, achieving company goals is not a last-minute task because the gap between the resources they have today and the resources they need to live the post-exit lives they desire is wider than they realize.
Successful Exit Planners know that the sooner owners appreciate the magnitude of their resource gaps, the sooner they will engage in planning.
Misperception 3: If Exit Planning Was Important, Another Advisor Would Have Mentioned It.
As advisors, we must take responsibility for this misperception. Fewer than 25% of owners have ever talked to an advisor about creating a plan. Owners are busy and focus on today’s business challenges. They are unlikely to give a lot of thought to planning unless an advisor consistently asks them about their future without the business. It’s clear that unless we reach out to our clients, Exit Planning does not happen. Have you reached out?
For more tips on how to motivate business owners to start planning, watch our most recent webinar: 6 Ways to Get Owners to Act.
- Owners don’t take the initiative to initiate Exit Planning, so we must reach out to them.
- To be effective, we must consistently and continuously deliver a message on the need to plan and to take action with you.
- The message should be branded by your firm, differentiate your practice, position you as an expert, and require minimal time to create and send.