Proactive or Passive: What Kind of Advisor Are You?

We find that professional advisors typically read this blog for two purposes. They want to:

1.     Grow and perhaps redirect their practices to focus on representing business owners.

2.     Improve their ability to help owners increase and preserve the value of their companies and eventually exit them on their terms.

Many advisors haven’t been able to accomplish either for a variety of reasons. One which they may not have considered: advisor passivity when confronted with owner passivity.

Most owners simply don’t spend the time or the money necessary to take action to position their businesses and themselves to exit successfully. Instead, they respond to the idea of business Exit Planning with some variation of:

·       “How can I drain the swamp when I’m up to my ears in alligators?”

·       “My company is worth more than enough, so I can exit whenever I want!”

·       “I can never exit because the business can’t run without me.” 

These owners seldom initiate planning or take action aimed at exiting successfully.

It’s clear that most will not approach you to talk about Exit Planning. So, what can you do if you want to use your expertise in Exit Planning to grow your practice and/or improve your ability to help your clients execute the most important financial event of their lives?

Be proactive.

Defining Proactive

Asking owners about their plans to exit “someday” is not proactive. Taking responsibility for helping owners achieve their goals through a successful business exit is.

Being proactive is not being pushy or obnoxious, rather, it is recognizing your responsibility to make forward progression in the best interests of your clients. Since most owners don’t take steps to prepare for their business exits in a timely fashion, we need to encourage, support, and guide them.

How do you take initiative in a way that demonstrates to owners that you are working in their best interest? How do we convert some-day-but-not-today owners into Exit Planning clients?

Consider the advice of architect and inventor, Buckminster Fuller.

“If you want to teach people [owners] a new way of thinking [about exiting], don’t bother trying to teach them. Instead give them a tool, the use of which will lead to new ways of thinking.”

–Buckminster Fuller

What’s in your Toolbox?

What tools can you give owners to lead them to a new way of thinking and acting about leaving their businesses?

First, become knowledgeable in a proven planning process that optimizes owners’ odds of reaching their exit goals:

Goal 1:  Leaving their companies when they want

Goal 2:  Leaving their companies with the money they want

Goal 3:  Putting their companies in the hands of the successor(s) they choose.

Second, tell owners about the benefits of this process and your willingness to share your expertise. Suggest that you begin by simply understanding their goals and the types of exit strategies that might work best for them. Offer to assess the financial resources they currently have and determine what must be done to close any financial or other gap that would prevent them from exiting on their terms. 

Let’s say you are working with an owner and you determine that there’s a $2 million gap between the resources they want (or need) to live the post-exit life they desire, and the resources they will likely have on the date they want to exit. To address this gap, you can introduce them to the tools you can use to motivate members of their management to grow the value of their company at the pace needed to close that gap.

BEI has an assessment tool that quickly and easily identifies an owner’s chief concerns and tools to address and resolve those concerns. In addition,  BEI’s planning softwarecontains dozens of recommendations that advisors can customize and use to address their clients’ specific Exit Planning goals. One example is to create a non-qualified deferred compensation plan, another is to consider a stock purchase or stock bonus plan. Further, BEI provides training on when and why to make each recommendation.

Passive or Proactive?

There is no reason for you to wait until your clients and prospective owner-clients think they have the time or money or need to begin planning their business exits.

  • Exit planning isn’t a “some-day-but-not-today” issue. As Members of BEI’s Network of Exit Planning Advisors  know, without a plan in place, few owners will achieve the three fundamental ownership goals of leaving their companies:
    1. when they want, 
    2. for the money they want and
    3. in the hands of the successor(s) they choose—much less other goals they may have for themselves, their family members and companies.
  • Unlike owners who don’t know how to reach their goals, trained Exit Planning Advisors have a toolbox full of strategies they can use for that purpose.

Passive advisors wait, and wait, and wait for owners to approach them and ask for help orchestrating their business exits. Proactive advisors equip themselves with the tools they need to reach out and help their clients and then put those tools to work.

The Bottom Line

Skilled Exit Planning Advisors live in a different world and have varying priorities than advisors who lack this expertise. Without knowing whether an owner wants to exit this Friday or 10 years from now, Exit Planning Advisors educate owners about the benefits of Exit Planning and their ability to design successful Exit Plans. 

You can do the same. 

You can use Exit Planning to grow your practice and make a meaningful difference in the lives of your business owner clients by helping them increase and preserve the value of their companies and eventually exit them on their terms.

Related Articles

Pardon our dust! Some pages may have interruptions while we get the new website cleaned up.
This is default text for notification bar