Owner Hot Button No. 1: The Departure of a Key Employee

Fri, 01/14/2022 - 09:01


Topics in this blog often describe techniques BEI Members use to help owners deal with pressing business-related needs. We know that when advisors discover a business need that they can help resolve they stand to gain a client, a client that likely becomes an Exit Planning client.

In the next several posts, we’ll discuss typical owner “hot buttons” and how to handle them in a manner that initiates or leads to client engagement and Exit Planning.

The situation: 

At a meeting with his advisor, Mary Carroll, Gene Cassidy repeated his frustration about his business, “You know, I’d like to get out of my business in the next five years or so, but I’m concerned that I won’t be able to if I lose either of my two key employees, especially since my first choice is to sell the business to them! Any suggestions?”

Mary understood Gene’s concern and readily agreed. She knew his company relied on two of its key employees, the operations manager, and the sales manager. The loss of either would delay Gene’s exit and possibly, his ability to sell his business.

Let’s pause here to reflect on what you would recommend to Gene. What actions could Gene take to safeguard the business from the loss of either key employee?

If you can offer suggestions to help owner-clients resolve their pressing problems, you strengthen your relationships. If you have nothing to offer, owners typically turn to other advisors—possibly your competitors—for advice.

Exit Planning is Your Competitive Advantage

Advisors who lack the skills to identify and address an owner’s needs, such as Gene’s, typically refer owners to other advisors or perhaps suggest a single solution they’ve read about or experienced with a client. Advisors with few plays in their playbooks aren’t much help to owners and their ability to grow their practices is limited. Your ability to identify and address an owner’s top needs separates you from your competitors.

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The Exit Planner’s Playbook

What would advisors whose core practices are identical to yours—but have added Exit Planning to their skill set—do for Gene? They pull recommendations from their Exit Planning playbooks.

Before offering Gene advice, they first seek to understand Gene’s bigger picture as Exit Planner Mary illustrates:

“Gene, before we discuss how I can help you retain your key employees, can you tell me a bit about your long-term goals and aspirations and something about your ability to achieve these goals today?”

Gene, a bit impatiently, responded, “Why do long-term goals matter if I can’t keep my employees!

Mary explained that she had several ideas in mind, but if she knew more about Gene’s goals and what was needed to achieve them, she could 1) recommend solutions to keep the employees and 2) further Gene’s ultimate goal of exiting his business in five years.

“O.K., I get it,” Gene said. “It’s sort of like killing two birds with one stone. I mean feeding two birds with one scone!”

“Exactly!” Mary agreed. “Your concern about your key employees is not at all uncommon for many owners, and it is one I think is best tackled on two fronts. The first is to motivate your key employees to increase company cash flow and value and offer them incentives to remain with your company for the long haul. The second is to prevent important employees from taking employees, customers, trade secrets, vendor relationships if they do leave.”

Mary continued, “There are a number of different incentive plans we design for our clients to motivate and keep their key employees. These plans also help you achieve your goals for yourself, your employees, and your business even if one of your employees leaves. Let me explain a few of these plans and we can help select the one that is most appropriate for your situation.”

“But how do any of these plans help me if one of my key employee leaves and decides to steal some customers or employees?” Gene asked.

Simple. We have your attorneys prepare employment agreements containing non-solicitation provisions which prohibit them from taking other employees, customers or vendors if they leave, ” Mary said.

“Great idea, but I don’t think my guys would sign employment agreements at this point,” argued Gene.

“You’re right: They may not,” Mary agreed. “That’s why we sweeten the pot with the incentive plan. The benefits of the incentive plan offset the possible negative impact of the non-solicitation provision. We combine incentive plans (the benefit) with non-solicitation provisions (the detriment). If that sounds good, let’s look at several ideas for motivating and keeping key employees and narrow the list from there.”

Compare Mary’s responses to those most advisors give when they can only recommend strategies they’ve read about or seen used in the past.

Mary provided a solution to Gene’s pressing problem—the need to keep his key employees. She did so in a manner that also furthered Gene’s ultimate goal of exiting his business. Two birds. One scone. It was natural for Mary and Gene to move forward with more comprehensive planning.

If you find yourself at a loss when owners ask you to help them resolve their top-of-mind concerns, we ask you to consider what it would mean for your practice and your clients to approach planning through a wider lens


  • Understanding a potential client’s top-of-mind concern and suggesting possible remedies converts potential clients into paying clients.
  • The ability to identify and address an owner’s top need(s) separates you from your competitors.
  • Identifying the best solutions to owners’ top-of-mind problems requires advisors to understand the longer-term goals owners have for their businesses and themselves.

Next week, we'll cover how to handle another common business-owner hot button: the loss of key customers. 

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