How to Work With Business Owners on Exit Planning

Submitted by Elizabeth J Mower on Tue, 07/31/2018 - 6:00am
A man and woman shaking hands while sitting at a desk.

Technology has developed at exponential speeds, allowing consumers to become more empowered than ever before. As a result, most consumers have begun to expect the businesses they work with to collaborate with them rather than sell to them. The days of Glengarry Glen Ross-style sales tactics—of supreme pushiness and pressure until the sale’s been closed—have started to fall away. Business advising is no different. The human element of advising is becoming more important than the products advisors sell.

In this series, we’ll look at three ways that Exit Planning speaks to the human element of how Exit Planning Advisors work with their business-owning clients. These three aspects can be the difference between an advisory practice that treads water and an advisory practice that thrives.

  1. Owner-Centricity: Working With Owners, Not For Them
  2. Collaboration: Giving Business Owners Control
  3. Empathy: Collaboration Through Understanding

Let’s look at an example of the difference between working for business owners and working with business owners, and how it ties into the expectations business owners have about working with Exit Planning Advisors.

You Are Not a Puppet

Joe Duensing was excited. He was an incentive-planning expert and had recently spoken with Eduardo, the owner of a distribution company. Eduardo came into the meeting with ideas to implement, the most important of which was a stock bonus plan for two of his key employees, Javier and Willson.

“If I were in their position, I’d want more money for more responsibility. A couple of my other advisors suggested I set them up with a stock bonus plan. So, can you help me do this?” Eduardo asked him.

“Yes, I can,” Joe responded. “I find that stock bonus plans are a good way to keep employees with the company.”

Over the next few months, Joe worked with Eduardo to set up a stock bonus plan that Eduardo thought would help retain his key employees. But one day, Eduardo came storming into Joe’s office in a panic.

“Joe, I presented the plan to Javier and Willson. But Javier said he’s going to accept an offer somewhere else.”

“You’re kidding,” Joe said.

“No! He said that the extra money was nice, but that wasn’t the driving factor behind him staying!” Eduardo said.

“Did he say what he wanted?” Joe asked.

“He said he wanted to become an owner in the company, and that this other place offered him that track. I didn’t know that was an option.”

“Well, we can offer him something similar,” Joe said.

“It’s too late. He’s already gone,” Eduardo replied. “So, what do I do now?”

In this situation, Joe was all too eager to work for Eduardo. He immediately said yes to Eduardo’s request for a stock bonus plan for his employees, without asking important follow-up questions. Joe forgot the most important aspect of owner-centric planning: It aims to achieve owners’ goals. It does not aim to have advisors say “yes” to every owner request. In failing to ask follow-up questions, Joe also failed to help Eduardo achieve his goals.

Let’s look at how a certified Exit Planning Advisor uses owner-centric planning to help Eduardo accomplish his goals.

Getting Owners to Act Using Your Expertise

After becoming a Certified Exit Planner through BEI, Kris Lackey took her first meeting with a distribution company owner, Eduardo. Eduardo was anxious to make sure that his two key employees, Javier and Willson, stayed with the company and ran it while he prepared to exit. His goal was to receive $7 million after taxes.

“Kris, a few advisors suggested that I install a stock bonus plan for Javier and Willson. Can you help me do that?”

“I’m happy to help,” Kris began. “Can you tell me what you hope to accomplish with this plan?”

“I want to make sure my guys stay with the company and run it while I make my plans to exit,” Eduardo said. “I figure, who wouldn’t want more money to do a little more work?”

“That’s a valid idea,” Kris said. “Is money your top priority?”

“It is,” Eduardo replied.

“Let me ask you,” Kris said, “if you could get 15 million after-tax dollars for your company, but you had to agree to shut down local operations and lay all of your employees off, would you do it?”

Eduardo thought for a moment. “No, I couldn’t. My employees are too important for me to do that to them. But what does that matter?”

“I ask you that because I think we might want to talk to Javier and Willson about what matters to them. Like you, they might have more important things that they care about.”

Eduardo agreed that this was a good idea, and Kris made it easy for him to act on it. Using her Advisor Network, Kris put Eduardo in contact with a business consultant, Ana. Ana interviewed Javier and Willson to gauge the kinds of things that motivated them. For Willson, more money for more responsibilities was his top priority. A stock bonus plan would work fine for him.

However, Ana found that Javier had ambitions for leadership at Eduardo’s company that went beyond more money. Based on what she had learned, Ana and Kris suggested to Eduardo that he transfer a significant amount of ownership to Javier if Javier could meet certain growth expectations that went beyond what the company was already doing.

Eduardo took their advice. Kris worked with an incentive-planning expert, Doug, and helped Eduardo install separate incentive plans for Javier and Willson. Kris also had Ana work with Javier to give him the proper training to work toward ownership. Over the next five years, company growth tripled. Eduardo retired with $9 million after taxes. Willson received more company stock as he took on more responsibilities, and that stock’s value soared. Javier ended up as a 49% owner, because his performance shattered all expectations. Everyone got what they wanted in the end.

In this scenario, Kris combined BEI’s owner-centric planning with her Exit Planning expertise to give Eduardo options that he didn’t even know he had. Using her Advisor Network, Kris could put Eduardo in touch with other experts to turn his ideas into action items. Most importantly, Kris managed to probe Eduardo’s goals without belittling him or suggesting that he didn’t know what he was talking about. She collaborated with him, helped him come to a new conclusion about what mattered most to his business exit, and gave him options for how to achieve his goals.

BEI trains Exit Planning Advisors to know which questions to ask business owners and how to navigate the complex wants and needs they have. The tools and strategies BEI provides help advisors avoid the temptation to simply do as they’re told, instead finding the best solutions for their business owning-clients.

In our next post, we’ll examine how Exit Planning Advisors give up control in favor of letting business owners control the outcome of their exits, making them more referable and increasing their influence.



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