Is Exit Planning Only for Aging Owners?

Fri, 10/14/2022 - 08:00

Is Exit Planning Only for Aging Owners?

When an advisor is approached with the concept of Exit Planning, it is common to be met with aversion or disinterest in adding those services to their practice. Perhaps they feel the planning work they do is the same thing as Exit Planning, or maybe they feel their business owner clientele are not in need of those services due to their age or place in the ownership cycle.  

However, as data has been collected on the state of the economy and the interests of the modern-day business owner, insights suggest that the market for Exit Planning is larger and more vast than ever before. 

Every few years, BEI produces a Business Owner Survey. While the 2022 report is in its final stages of preparation, there is one insight we couldn’t wait to share: 

Business owners are thinking about Exit Planning at an earlier age than ever before. 

While this might not come as a huge shock, this insight suggests that Exit Planning Advisors will not only be working with business owners who are younger in age, but that they may face new obstacles and a different outlook than in years past.  

Business Owner’s Outlook  

While the above insight might suggest that younger business owners are in a rush to retire, that may not be the case. In a 2021 study by Wilmington Trust, it was reported that confidence in the future of the US economy has declined, as well as confidence in the ability to gain new prospects for their products and services. 

With an emphasis on adopting digital tools and a rapidly changing business landscape, insecurities over technology have accelerated the owner’s interest in Exit Planning and they feel that getting out of their business may be a better solution in the long-term. Business owners are weighing the pros and cons of these factors to determine when the right time is for them to exit, leading them to consider their Exit Plans earlier than ever before. 

How Exit Planning Advisors Can Help 

Ease Anxiety 

The above outlook and insecurities of a business owner are only heightened by the headlines. While you may not be able to fully settle anxieties or quiet the whispers of a possible recession, inflation hikes, wars, labor shortages, the list goes on; the reality is that the economy has both tailwinds and headwinds. 

A 2022 mid-year market review by Edelman Financial suggested that these negative headlines don’t often tell the full economic story. For example, it was reported that in the first half of 2022:

“Beneath the GDP contraction, consumer spending remained strong and nonfarm payroll gains averaged more than 480,000 per month, remaining the tightest job market in decades, driving massive wage gains.” 

Headlines don’t always focus on the good news. As an Exit Planning Advisor, having a firm grasp on data, both current and historical, can help put the state of the economy into perspective for your clients. Encourage them to follow the data, not their emotions.

Help Diversify 

Exit Planning Advisors can help their clients earn greater value from all of their collective assets. It would be ill-advised to let younger business owners assume that even by contributing the maximum amount to a 401(k) plan each year, for example, would give them enough to be financially independent at age 50. 

Encourage owners to diversify their assets and find additional passive income streams to more rapidly generate wealth that will sustain long-term. An advantage of working with an Exit Planning Advisor for a business owner is that they will build a team of advisors who can recommend different diversification approaches. These could include tax strategies, different kinds of insurance plans, or even establishing an estate plan, all to protect their wealth and their family in the future, even when the market rises and falls. 

Determine Lifestyle Plans

As is true with any business owner in any stage of their ownership cycle, if a younger owner desires to sell their business and retire, it is still crucial to determine what they want their post-exit life to look like.  The New York Times recently reported that millennials specifically dream of stopping work, or doing only fulfilling work, 15 years before their parents did. 

However, these aspirations are colliding with the reality that they will likely not be able to accumulate enough savings to do so. Despite the struggle and the means to save more, the 2022 Retirement Insights Survey from TIAA revealed that millennial workers, ages 25 - 39 have nearly 40% confidence in their ability to plan for retirement. This indicates that business owners in this age group will need to be approached about Exit Planning at an earlier stage. 

No matter the confidence level, the key for an Exit Planning Advisor is to really nail down what their plans for retirement actually are. Whether it’s the time to travel and spend with their family, the ability to volunteer more, or something else, knowing the dreams and lifestyle needs of a business owner aspiring to exit makes the difference in mapping out strategies to get them there. 

Start Now 

Having the knowledge that more and more business owners may want to exit sooner, or at the very least have it on their minds earlier, broadens the number of prospects you have for Exit Planning. Targeting business owners closer to the start of their business will only reap more positive benefits by lengthening the time you’ll spend with them doing Exit Planning work. 

While every Exit Planning engagement is different and has timelines driven by each owner’s exit goals, time binds all decisions. It is advisable to start planning for an exit at least five years in advance, but 10+ years is even better. Knowing that, as well as the fact that younger business owners want to retire, may broaden your opportunities as an advisor and help you shift focus. 



As mentioned, the Exit Planning Market has expanded (beyond Boomers) and the 2022 BEI Business Owner Survey, which will be released soon, will report on what else that means for advisors. Knowing that younger generations have increased interest in Exit Planning supplies ample opportunities for those involved in or looking to get started in the Exit Planning space. 

Once released, the BEI Business Owner Survey will dive deeper into these opportunities, what other trends have shifted, perceived obstacles, and more! 

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