Good Questions Drive Better Exit Planning Conversations

Sun, 04/24/2022 - 21:17

Written by: oogonyo

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:

  1. 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.

  1. 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.

  1. 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.

  1. 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.  

  1. 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.

  1. 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.

  1. 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.  

The Top 9 Ways to Increase Business Value for Exit Planning

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.

  1. 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.
  2. After asking a question of any kind, repeat back the response to confirm that you understood the need correctly.
  3. Take notes and provide every member of the Advisor Team with a list of action items and deadlines to hold each member accountable.
  4. 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.

Follow us on LinkedIn, Facebook, and Twitter to stay up to date on all current Exit Planning news and trends.  

Good Questions Drive Better Exit Planning Conversations

Is Exit Planning a Good Fit for You?

Fri, 08/20/2021 - 08:00

Written by: JMongaras

If you are thinking about adding Exit Planning to your practice, there are several factors you can use to assess whether it makes sense for you to acquire the knowledge and training required to be an effective Exit Planning Advisor. In this article, we look at the primary factors: 

  1.  Your goals 
  2. A willingness to spend time gaining knowledge 
  3. Your ability to recruit and work with a team of other professional advisors 

Factor 1: What do you want Exit Planning to do for you and your practice? 

Advisors cite these reasons for deciding to become Exit Planning Advisors: 

  • 22% - Improve or adopt a consistent planning process 
  • 22% - Expand services to existing business clients 
  • 22% - Make a difference in lives of my clients 
  • 17% - Support closely held and family businesses 

We find advisors who undertake Exit Planning solely to increase their revenues seldom stay the course. They are less interested in helping owners plan for the future than they are selling a product or service today. Exit Planning does result in substantially greater and more sustainable revenue, but it takes an investment of time to learn the tools and process of Exit Planning.

Factor 2: A willingness to spend time gaining knowledge 

Like most advisors, we understand you want to help owners but are limited by a lack of knowledge of the process and tools to do so. Few advisors are willing to step forward with advice unless they are confident they will do no harm. To help owners, advisors need additional knowledge of a process, know how to execute a plan, and have access to the right tools. 

Process: This blog focuses on BEI’s Exit Planning Process, a process that BEI and our Members have developed and refined for the past 20+ years. If you’ve been following this blog, you probably know more about Exit Planning than most of your peers.  

Execution / Tools:  

You can learn a lot about Exit Planning from this blog, but you need to know more about how to execute an Exit Plan, e.g., what to ask and what specific actions to recommend to address the obstacles that stand in the way of an owner’s successful exit. 

For example, if an owner’s goal is to grow business value, is the best tool bonusing ownership, selling ownership, or using money to motivate a child or key employee? When is the right time to minimize business risk through employment agreements with important employees? Using the right tools at the right time is critically important to the owners we work with. You may be thinking, “I don’t have the time needed to gain the knowledge necessary to help owners with issues such as these. I’ve got a practice to run! I’m not going to charge ahead with Exit Planning when I’m not confident of what I’m doing.”  

We understand your concerns. BEI Members know what questions to ask owners and they use EPIC™ Exit Planning Software to generate a variety of appropriate recommendations. It takes about 10 hours to take our initial training course and about an additional 15 to complete our advanced course. After completion of both of these training courses, you would be eligible for the Certified Exit Planner designation. Let’s look at how we use knowledge of the planning process and relevant tools in planning. 

Image removed.

One Tool in Action 

It’s helpful to look at how process and execution interact in a typical Exit Planning situation. Let’s say you discover that an owner wants to motivate a key employee to increase revenue in her business and asks you for help. By asking relevant questions, you learn that this owner is unwilling to sell but is interested in designing an incentive plan that rewards the key employee for overall revenue growth of the company. Using this input, you use BEI’s EPIC Planning software to offer several possible recommendations, including: 

  • Cash bonus 
  • Cash bonus with partial deferral for a year or so 
  • Non-Qualified Deferred Compensation Plan 
  • Phantom Stock Plan 
  • Stock Appreciation Rights Plan 

Each recommendation contains a short description of situations when it might be appropriate, what it is, and what it does. For example, these recommendations would include a discussion of incentive formulas, vesting schedules, and forfeiture provisions. Based on the owner’s response to a recommendation, the Exit Planning Advisor often suggests a meeting with a professional experienced in designing and implementing the specific recommendation. This leads us to the next factor: access to expert advisors.  

Factor 3: Your ability to form and use a team of expert advisors 

BEI Members know that no one advisor can do it all, so they rely on their advisor teams to provide suggestions, observations, and additional (or revised) recommendations. Having a team of experts behind them gives them confidence that what they recommend is the best solution to a client’s needs. That team also gives Exit Planning Advisors confidence to pursue planning engagements and suggest appropriate courses of action. BEI provides its Members with a process and tools to find, vet, and recruit expert advisors. If done right, advisors on an advisor team are happy to work with BEI Members because they are referring them clients! 

Takeaways 

  • Advisors become Exit Planning Advisors for personal and financial reasons. 
  • The foundation of a successful Exit Planning advisory practice is:
    • Knowledge of a proven planning process 
    • Access to a host of recommended actions to include in an owner’s Exit Plan with information on the appropriate use/situation for each. 
    • The creation and use of an expert advisor team to confirm and implement the Exit Planning Advisor’s recommended course of action and to suggest additional recommendations when appropriate.  

Follow us on LinkedInFacebook, and Twitter to stay up to date on all current Exit Planning news and trends.

arrows-box-business-533189

Become More Than the Average Advisor

Fri, 08/13/2021 - 08:00

Written by: JMongaras

If you are reading this blog, you seek answers about how to help your business-owner clients transition ownership successfully. You have mastered your profession and are successful but seek more. That “more” falls into several categories: 

You want to be more distinctive. You know that there are tens of thousands of other advisors in your profession, most of them capable, but it can be rare to find partners who can move the needle when it comes to making a real difference in the lives of their owner-clients. 

You want to be more valuable to your clients. You want to make a difference, and that difference is the ability to help business owners benefit from their lives’ work. When representing owners, you want to use your professional training and experience, as well as your practical experience to benefit them and your practice. 

You desire more meaning in your career. You want to live a life of significance. Doing the same projects, year after year, doesn’t hold your interest the way it once did. You want a new challenge, one that is interesting and significant. 

And finally, you want more success. You recognize that the opportunity to help baby-boomer owners (and others) plan for their approaching business exits is immense. 

The Road to More 

Opportunities abound to help owners plan for what is likely the most significant financial event of their lives, but there are hurdles that prevent many advisors from taking advantage of these opportunities. 

The advisors who attend BEI’s training events cite the most common hurdles including: 

  • Lack of knowledge 
  • Lack of confidence in moving into a new practice area 
  • Fear of making a mistake 
  • Concern about the time required to tackle a new practice initiative 
  • Engaging owners in any type of planning is difficult 

We understand these concerns and we also understand the frustration that arises from the inability to help long-time clients with the most important decision of their business lives. We have been in your shoes. 

Some of us here at BEI were once advisors to business owners who by trial, error, and refinement over decades, transformed our traditional practices into practices that focused on owner-based planning—a discipline we now call Exit Planning. Today, we have decades of experience helping other advisors become fully competent Exit Planning advisors. 

Smoothing the Road to More 

Since 1996, BEI has trained thousands of advisors to use its owner-centric Exit Planning Process and provided them the tools and resources they needed to become “more.” We can help you too become more—a top-notch Exit Planner—through training, access to a proven and finely-tuned process, and tools to create your own advisor team. 

What factors should you consider when deciding whether to acquire the knowledge and training required to be an effective Exit Planning advisor? We’ll discuss them in the next post. 

TAKEAWAYS 

  • Skilled and experienced professional advisors seek to be more distinctive, meaningful, valuable, and successful. 
  • BEI’s training overcomes the most common reasons advisors hesitate to add Exit Planning to their practices. 
  • BEI’s training, process, and support in forming advisor teams prepares you to make a meaningful difference in the lives of business owners, and in your practice. 

Follow us on LinkedInFacebook, and Twitter to stay up to date on all current Exit Planning news and trends.

better_outcomes

Closing the Gap

Every Exit Planner advisor knows that one of the first steps of the Exit Planning process is to figure out the gap between what a business owner currently has and what he/she might need by the time they finally exit the business. What assets can help contribute or might be a liability? Do you have the right management team in place? What are the areas to focus on first to ensure we are able to close this gap?

The Unintended Consequences

The decisions owners make when running or deciding the sell their business don’t only impact them. Their decisions will impact their entire staff, customers, and family. Don’t let the unintended consequences of their decisions impact their business or their key people.

In this podcast, John Brown and Elizabeth Mower discuss the consequences your business owner clients might face and the people that need to be informed of all major business decisions. 

The Exit Planning Process: Phase One 

Fri, 08/06/2021 - 08:00

Written by: JMongaras

The essential foundation for any business decision or event—hiring employees, launching new products, purchasing equipment, etc.—is planning. Planning is also the foundation for the projects we, as professional advisors, propose or undertake for our business owner clients. 

In the first phase of the BEI Exit Planning Process, we establish a solid foundation for gathering accurate information. To build that foundation, BEI advisors conduct a thorough analysis of the business to gain a clear picture of an owner’s goals for the business and themselves. They then collect accurate information related to an owner’s existing resources as well as the resources needed to achieve their goals and aspirations. BEI Members have access to lists of specific questions to ask owners to gather the information they need.   

Accurate Information for Advisors 

Regardless of the project, we undertake for our clients, we need accurate information to do our jobs effectively. If, for example, you are a financial advisor/planner, it’s essential to know the value of an owner’s assets. If you are an insurance advisor, you must know how much cash the business and the owner’s family would need to continue should the owner die before a planned exit. If you are a CPA, you are better equipped to help minimize taxes and determine how much the company will need in cash flow or financing if you know the owners’ goals. Accurate information will help develop the right plan for your clients.  

Learn how to improve your planning process with BEI's Planning License 

Accurate Information for Owners 

Certainly, advisors benefit from accurate information, but our clients rarely recognize the value of that information to them, primarily because we don’t tell them! We’ve found that even owners who are not actively thinking about their business exits benefit from:

  • Articulating what their wants and needs are 
  • Finding out how much money they’ll need to meet their goals 
  • Learning whether they currently have the money necessary to meet their goals

With your help, owners who do not yet have the financial resources necessary to meet their goals, gain the additional benefit of understanding the size of the gap between where they are today and where they want to be when they leave their companies.

If you are not yet comfortable conducting the first phase of the Exit Planning Process, much less telling an owner about its benefits, that’s understandable. You may not have experience asking the questions that lead to the information you need to complete the first phase. If that’s the case, we’d be happy to talk to you about the questions, education, and tools that we provide BEI members. 

TAKEAWAYS 

  • Sound owner-based planning begins with: 
    • A deep and accurate understanding of owners’ goals for the business and themselves 
    • The collection of accurate information about owners’ existing resources 
    • An analysis of whether owners have the resources necessary to achieve their goals and aspirations 
  • Accurate information benefits advisors and owners. 

Follow us on LinkedInFacebook, and Twitter to stay up to date on all current Exit Planning news and trends.

pexels-miguel-a-padrinan-2249528