Good Questions Drive Better Exit Planning Conversations
Much of the work of a business advisor, and especially an Exit Planning Advisor, is driven by one’s ability to have effective conversations with current and prospective owner clients. It is a common misconception that these conversations must result in providing business owners all the “right” answers.
As an Exit Planning Advisor, you have the knowledge to provide your clients with strategic solutions to help them reach their goals. With this knowledge, it is natural to want to jump right into problem-solving. However, from the perspective of a business owner, their challenges are dynamic and might go beyond what meets the eye.
No matter what industry, advisors are in the business of relationship building. This means that within these conversations, especially the initial conversations about Exit Planning, you must listen with the intent to understand, not just to respond.
The Downfalls of Wrong Questions
In many cases, how you word questions has a direct impact on the success of those initial conversations. The reasons that generic planning questions are not productive may include:
- Owners may be guarded in the information they want to share
- Owners may just be looking for free advice
- Owners are hesitant to overshare in fear they are being “sold” something
- Owners are only asked questions about a certain expertise
- Owners derail the conversation with minor issues
To an Exit Planning advisor, a failed conversation is a missed opportunity for you. Not only that, but it can lead to an owner being unprepared to exit with devastating consequences to the business and their family. Being intentional about what questions you ask and how they are used in planning conversations can be beneficial to the long-term relationships you form with clients.
Good Questions: Where to Start
When you sit down to have a conversation with a client, the value you bring begins with good questions and a willingness to listen and understand your clients on a deeper level. When the right questions are asked, you are better able to get owners to open up and their responses often lead into other important Exit Planning topics. Some advisors choose to stick to a standard set of questions, while others like to come up with them on the fly based on where the client takes the conversation. Regardless of your preference, valuable conversations about Exit Planning should cover the following topics:
- Owner’s Involvement
Discussions about your client’s current involvement and plans to continue at any level often prompts further discussion about key talent, potential recruitment, incentive plans and the future transition of management.
- Owner’s Desired Post-Exit Future
Do you know what your client envisions for the next chapter following their business exit? Learning this might lead to insights on their preferred timeline and personal financial needs.
- Owner’s Obstacles & Challenges
At any given time, your client is battling with problems that are keeping them up at night. Knowing what those are will give leeway to analyzing where there are planning gaps and what stands in the way of achieving their desired goals. This will also help you prioritize what areas of the business to focus on first.
- Owner’s Financial Needs
When your client exits their business, how important is the business in supporting their financial freedom? This topic can lead to further discussion on business value, cash flow projection, formal agreements that may be necessary, and more.
- Owner’s Current Transition Plan
You will run into a broad spectrum of scenarios as you begin working with clients on their Exit Plans. Some may have an exit path decided on as their most important goal. Others may think they know what exit path to take only to have another more important goal show that a different path is the best choice. You may also find that some haven’t even started thinking about it at the time of your initial Exit Planning conversation.
Whether it is the hope to transfer ownership to a family member or a key employee, or sell to an outside party, many considerations will be brought to light once you know where the owner stands on who will lead and own in the future. Considerations could range from the need to create a management development plan to outlining business continuity instructions.
- Contingency Plans
Do your clients have contingency plans in place so that the business could continue in their temporary or permanent absence? How would the business fare if key employees or key customers left? Having an idea of what the owner’s “what if” strategies are can indicate larger patterns in their plans for their inevitable business exit.
- Current Exit Plan Progress
Is Exit Planning even on the radar at this point? For most business owners, probably not. It is your job as an Exit Planning Advisor to articulate the importance of starting early and showing them that you have the tools and resources to help them create, manage, and execute a plan that will allow them to exit on their terms.
While this list is not exhaustive, nor does it list specific questions to ask, framing your questions in a way that will cover these topics will leave you in a good place following the initial Exit Planning conversation. These questions will also signal the key areas in which you can help your client increase business value over the duration of the Exit Plan.
Good Questions: Continued Conversations
The importance of the questions lies in the ability of the responses to drive the conversation in ways that provide more clarity on the owner’s goals and direction in how you might be able to reach them. Since Exit Planning is more than a one-time transaction, your conversations will continue throughout the duration of the Exit Planning Process.
In efforts to maintain a mutually beneficial relationship during this time, the Exit Planner serves as the relationship master, guiding one-on-one conversations with the client, as well as facilitating meetings with the Advisor Team. There are a few best practices to keep in mind to ensure these conversations go as smoothly as possible.
- Ask open-ended questions. Even if the owner responds with short, one-word answers, ask them to elaborate. You may be surprised where the owner takes the conversation.
- After asking a question of any kind, repeat back the response to confirm that you understood the need correctly.
- Take notes and provide every member of the Advisor Team with a list of action items and deadlines to hold each member accountable.
- Take advantage of networking with other Exit Planning Advisors. For example, BEI Members are a part of the larger BEI Network of Advisors, giving them access to advisors all over the country who are having similar conversations with their clients as you are with yours. Lean into each other’s experiences.
Exit Planning Advisors are tasked with running the show – owning the roadmap and making sure everyone stays on track. Building strong and stable relationships with business owner clients is key in facilitating the Exit Plan, start to finish. These relationships are only as strong as the conversations you are able to drive forward, and asking good questions is key in building credibility.
BEI has tools and resources to equip you with the knowledge you need to exude confidence and poise in every Exit Planning conversation. Schedule a meeting with us today to learn more about becoming your client’s most trusted advisor.