Common Misperceptions in an Owner’s View of Exit Planning
Last week’s post reviewed 4 ways to engage owners in planning and get them to act towards Exit Planning. No matter which tactic you take with your prospective clients, it’s also important to understand why owners are hesitant to start the process. In today’s blog, we’ll look at 4 common misperceptions about planning so you can match your tactics with the reasons why owners are holding back.
1. I am too busy to plan.
Owners are justifiably focused on present issues in the business and managing the day-to-day operations. In their minds, their exit from the business is far in the future and owners believe they will make time to plan later. In these cases, relating tasks to an owner’s immediate concerns can really make an impact.
By doing a quick assessment, you can visually show them their most pressing issues today, whether that be growing business value or hiring key employees. By alleviating those concerns now, you are not only freeing up their time in the present, but you are also freeing up time in the future for more planning endeavors.
2. I don’t think I need to plan.
Many owners don’t believe they need to plan because they don’t fully understand their own assumptions on the value of their business and their current financial resources. Further still, many owners don’t realize how their involvement as owner impacts the value and how much it might decrease once they leave.
Oftentimes, by showing that gap, you can better illustrate the time it would take and the steps necessary to grow business value. If you can urge owners to start with improving operating systems and getting key employees in place so that the business can run without them, they will be in a much better place when it comes time to make the transition. As a bonus, they can start to envision what to do with their free time post-exit.
3. If it was important, one of my advisors would have reached out about it.
While Exit Planning may not be top of mind for owners, as an advisor wanting to grow in this area of planning work, it should be top of mind for you. Don’t assume they are talking to their other advisors about Exit Planning and don’t wait for them to bring it up.
Be at the forefront of their minds with the content you send and the questions you ask. By doing this, regardless of if they want to do one phase of an Exit Plan or a comprehensive plan, you will be the trusted advisor they seek.
4. When I’m ready to exit, I’ll take action.
Owners frequently underestimate the amount of planning needed for a successful business exit. Transferring a business to the person the owner chooses, at the time they want, and for the money the need takes spending resources today. According to the BEI 2022 Business Owner Survey, 35% of owners indicated that not believing they needed to plan for their exit yet was standing in their way of doing planning work.
There are several ways to approach this misperception. One would be to offer to review their business continuity instructions. Even if their business exit is too far into the future for the owner to commit to planning today, planning for the scenarios that would take them out of the business today is still valuable.
The Bottom Line
In conclusion, it is not uncommon to be faced with skepticism when proposing Exit Planning to your business owner clients. However, with persistence and proven strategies, conversations with owners get easier when you can show them the long-term value of both planning for their future and working with you to do so.
