Getting business owners to understand the importance of Exit Planning is unanimously one of the most common challenges faced by Exit Planning Advisors.
Whether a new advisor or an experienced Exit Planner, you’ve likely heard excuses from business owner clients that run the gamut from being too busy to having uncertainty about what it entails.
These hurdles often derail conversations, hindering an Exit Planning Advisor’s ability to not only emphasize the importance of starting an Exit Plan, but also to sell themselves as the solution to their comprehensive planning needs.
Exit Planning Engagements & Storytelling
If we were to tell the story of an Exit Planning engagement with the plot characterized by the above challenge, we’d want to dig deeper into how the challenge has developed.
There are a variety of “villains” that would play a significant role in the character development of the business owner.
For some, it could be time and financial constraints, others don’t see planning as an urgent need, and some simply don’t know where to start or assume another one of their advisors will handle their exit when the time comes.
At the end of the story that is an Exit Planning engagement, the ideal transformation of the business owner is that of relief, accomplishment, and achievement of an unimaginable reality.
In order to position yourself as the hero, let’s take a look at some of the most common “villains” that inhibit an Exit Planning engagement:
Many business owners argue that adding another advisor to their mix of hired professional advisors just adds one more voice to the conversation. Between an accountant, insurance provider, financial advisor, attorney, and/or business consultant, it may sometimes be hard for an owner to realize the importance of bringing someone in to manage these relationships and roles as it relates to their exit strategy and long-term business goals.
There are times when owners disregard Exit Planning with the pretext that their Exit Plans are already set in stone. Suppose a business has been in the same family for many years. To these owners, they don’t see importance in looking into paths outside of family transfers and assume they’ll just transfer management to a relative when the time comes, with minimal planning necessary.
Expectation to Leave a Legacy
Another concern, particularly of family businesses or location-specific businesses, is the pressure to leave a legacy. Whether the desire is to place emphasis on the family’s impact or to leave a lasting mark on the community, owners often carry the stress of making sure they are doing their part to make meaning of their work.
Death or Disability
Death and disability are events that no one wants to think about, let alone plan for. The truth of the matter is that if either circumstance occurred suddenly, the business would be severely disrupted without any planning for the “what ifs.”
The modern business landscape, and the Exit Planning industry, has plenty of variables. Especially in light of the recent pandemic, whispers of an upcoming recession, and the “great resignation,” unexpected situations can arise at any time. Planning for a successful future does not happen without the preparation for such surprising events. Just like death or disability, these unexpected events create disruption that can take a toll on your client’s business, directly impacting the transferable value of the business.
Lack of Clarity
Many Exit Planning Advisors have been hearing of planning fatigue from their clients. Planning fatigue is when business owners are exhausted by either the act or thought of planning their business exit. This fatigue likely stems from a lack of vision, or an inability to see the positive, full-picture impact of Exit Planning.
Lack of Communication
The work that goes into Exit Planning appears daunting to business owners. In this case, they likely have not been informed about the process in a way that is accurate or digestible to them. Communication on what goes into planning, the timeline, as well as a business owner’s role is critical to build momentum and move forward an Exit Planning engagement.
Another common objection that business owners share with their Exit Planning Advisors is, “I don’t have the time to do this right now. Let’s talk about this later when I’m not so busy running the business.” This sentiment usually arises for one of two reasons:
- Business owners feel the current tasks they have on their plate are more pressing than planning.
- Business owners are intimidated by how much work Exit Planning seems to be and want to stick with what they know.
Scared of losing control
Successful business owners often start businesses because they want to be in control. As entrepreneurs and leaders, business owners are used to having a say. When it comes to a discussion on when and how that control goes away, it’s no surprise that owners are avoidant.
It is key that with this objection, as well as many of the others listed here, that you show the owners that Exit Planning actually gives owners more control: over their successor, their values-based goals, and their personal and financial futures.
Combatting the Villains:
Perhaps combatting villains and persuading clients against their common misconceptions was not exactly what you had in mind when you began working with business owners. However, there are a handful of ways to do so that all require telling a good story: one with you, the Exit Planning Advisor, as the hero.
Takeaways & Tips:
- Exit Planning Advisors strive to help business owners identify and prioritize objectives with respect to their businesses, their employees, and their families. Be clear, concise, and communicative about what the vision looks like at the end, and what the steps are in order to get there.
- Make the most of the initial meeting so that you ensure you get another one. Do this by asking good questions that ultimately drive better planning conversations, as well as personalizing the client-advisor relationship so that owners feel understood.
- Put an emphasis on building transferable business value. No matter their timeline or exit path, building business value will help them in the present, which is what they are likely more focused on if they are hesitant to plan.
- Timing: While it is important to keep a positive outlook, it is also wise to inform business owners of the risks of waiting to plan. Starting sooner has obvious benefits, while procrastinating only puts the owner’s goals in jeopardy.
- Being able to define your client’s goals goes a long way. Using active listening in each conversation to determine whether legacy, personal profit, tax savings or something else is of most importance to them will help to move along the process, one step at a time.
All in all, telling your story personally and strategically, no matter what villain is lingering around the corner, matters to the business owner. There is strength in your story and it paves the way to becoming your client’s most trusted advisor.
To learn more about how BEI’s tools and resources can help to differentiate your practice and combat misconceptions, schedule a meeting with us today.