One of the toughest things that Exit Planning Advisors have to do for business owners is help them focus on the goals that matter most. We often talk about how Exit Planning is owner-centric, but what can Exit Planning Advisors do when the things that the owner wants to do conflict with what the owner absolutely needs to do? How can advisors address situations in which strictly adhering to the owner-centric nature of Exit Planning can hurt the owner’s Exit Planning goals?
A BEI Advisor told me a story about how she confronted this exact situation. She had been working with a group of business co-owners. Each owner shared two things in common: They were still heavily involved in the business’ critical functions—from sales and delivery, to operations and internal systems—and they wanted to start preparing the business for sale. The problem that the Advisor saw was that the business didn’t have anyone who could do what the owners did, which meant that even though the company’s cash flow was strong, its transferable value was almost non-existent. Because transferable value is the driving force behind a successful ownership transfer, the Advisor knew that the owners had to address it quickly.
When this Advisor explained to the owners that the most important step for them to take would be to find and develop people who could take over their current roles, the owners panicked. One of them even asked her, “Why should we have to do that? Shouldn’t the people that we sell to be responsible for that?” Even after the Advisor explained why transferable value was important, the owners still said that finding and training people to do what they did was too much work. These owners were so used to self-made success that the idea of building something up for someone else was a foreign concept. They quickly became overwhelmed, and the Advisor began to sense that they were ready to give up on planning altogether.
Business owners often struggle when they have to do things that are different from the things that brought the business its success. In this case, the owners were used to doing everything themselves, and they had been doing it for over 20 years apiece. How could they possibly train anyone to do what took them 60 combined years to perfect themselves, especially when they wanted to sell the business within the next five years? The idea was overwhelming, and because they thought it was impossible to tackle at once, the owners began to rethink their planning efforts.
I asked this Advisor how she handled the situation, and I thought her strategy was perfect for any advisors looking to discuss Exit Planning fluently with their clients.
Reframing the Conversation
Rather than pushing these owners to do what she knew was best for them, this Advisor approached the discussion from a different angle. She acknowledged that training people to take over for them was a daunting task. She then proposed that they address something more manageable before they jumped headlong into a bigger project. She already knew that these owners also wanted to work on their personal financial plans, so she suggested that they talk about their retirement goals. The owners agreed and were right back on board with the idea of planning.
Because Exit Planning is owner-centric, advisors must address the needs that owners want to address. The best strategy for assuring that business owners complete their most important tasks without feeling forced is to help them complete smaller tasks first before moving on to the larger tasks. Success tends to snowball for business owners, so having them complete smaller pieces of an Exit Plan gives them the confidence to tackle bigger issues. It also helps owners get comfortable with the planning process, and builds their trust in the advisor’s process and skills.
Once those owners had their personal financial plans successfully in order, they had the confidence and willpower to begin looking for people who could eventually take over for them. They realized that if their personal financial plans were to be successful, they’d need to make the business attractive to potential buyers to fund those plans. That gave them the motivation to begin the search for management that could run the business in their absence.
The Advisor reframed the discussion in a way that spoke to the owners’ needs without forcing them to do something that they were initially uncomfortable with. Handling overwhelmed business owners doesn’t mean convincing them to do things they don’t want (but eventually need) to do. Handling overwhelmed business owners means breaking goals down into small pieces, accomplishing those goals, then using their newfound confidence to tackle the bigger issues. That’s how BEI Advisors use an owner-centric process to help business owners finish what they need to finish.