business owners – Business Enterprise Institute

Transforming Owner Resistance into Opportunities with Proven Strategies

Posted on October 20, 2023 by admin

See how BEI helps professional advisors like you overcome owner objections to business planning conversations.

When BEI engages with new and prospective professional advisors, some tell us about a common hurdle that prevents them from having the success they want: “Owners don’t want to talk about succession planning with me.” Even though advisors want to provide their important services and business owners know they should have a plan for their eventual business exits, there’s still resistance to the planning conversation.

The reasons why business owners feel this way can be numerous. They may misinterpret Exit Planning as someone ripping them away from their businesses against their will. They may also think that developing a plan for transition will take up too much of their time.

While these reasons are the result of misunderstanding the point and process of Exit Planning, it doesn’t mean that advisors should disregard them as there is a large opportunity to capitalize on with owners just like this. Typically, advisors just need to frame the offer of talking about Exit Planning differently. One of the most effective ways to do this is for advisors to rely on their core expertise.

Keep Planning Conversations in Your Wheelhouse

All successful advisors have exceptional credentials in their respective professional fields. The obstacle that falls in their way is often related to balancing their technical expertise with the relationship-building skills necessary to become a successful advisor.

For many business owners, the idea of an advisor coming to them to talk about leaving their businesses can be jarring. After all, it’s likely that they see their businesses as an extension of themselves. So, having someone suggest that they should plan for when it’s time for that extension to go away can be confusing and even threatening.

The way to overcome objections about business planning is for advisors to talk to owners in the owners’ language, using their core advisory expertise.

For example, we recently spoke with a CPA who uses the BEI Premium License to attract, engage, and eventually develop a plan with clients. When this advisor first started out, he would open his planning discussions with both current and prospective clients by asking, “Would you like to talk about exiting your business?” Usually, business owners would decline. He started to get frustrated, so he reached out to BEI. We suggested that, at least initially, he focus on how his core expertise fits into succession planning rather than focusing on outright Exit Planning.

This meant that rather than asking his clients if they’d like to specifically talk about leaving their businesses, he would ask them questions like, “What kinds of tax-minimizing retirement planning have you done?” or “How do you think taxes might affect you and your business when you eventually sell and retire?” These kinds of questions do two things:

They probe at business owners’ pain points without directly talking about their business exits. By asking questions about their futures without implying there is a problem, advisors can let business owners identify areas that they consider to be issues. When business owners identify a problem with how they see the future of their business, they’re more likely to commit to a conversation.

They let advisors guide the conversation toward Exit Planning using their core expertise. By leading with what they know, advisors can talk about aspects of Exit Planning with full confidence and help business owners identify what might be bothering them about their business exits. As a bonus, those advisors are more likely to offer products and services already being sold within their firm.

How BEI Helps Facilitate Planning Conversations

One of the major benefits of BEI’s tools, strategies, and content licensing is that these aspects help advisors use their technical skills on a larger playing field. Exit Planning Advisors use their core expertise to open the conversation about Exit Planning on terms that both they and their business-owning clients understand and are comfortable with.

It’s easy for advisors to over leverage their expertise without asking themselves why owners would care about what they’re telling them. BEI helps advisors balance their technical expertise with the relationship-building skills they need to establish the Exit Planning conversation properly, resulting in success not only for the client, but for the advisor as well.

From assessment tools and documented methods to show their expertise, to lists of questions to ask and access to advisors who have had proven success in breaking through resistance to Exit Planning, BEI knows how to help advisors start the Exit Planning conversation successfully.

Business Continuity: Protecting Client Value

Posted on September 22, 2023 by admin

In our contemporary business world, unpredictability seems to be the only predictable element. Business owners, from fledgling startups to well-established enterprises, find themselves navigating an ever-changing landscape, teeming with unforeseen challenges and obstacles.

This fluid environment makes having a robust business continuity plan not only invaluable, but essential. These instructions are a blueprint for safeguarding the hard-earned legacy of business owners. So, why is business continuity planning a non-negotiable facet of a successful relationship with your client? Let’s explore why you should engage your clients in conversations about business continuity and how it relates to their financial security.

Beyond Immediate Concerns: The Long-Term Vision of Business Continuity

In a recent survey conducted by BEI, we found that only 26% of business owners have created a business continuity plan as a step towards their Exit Plans. However, 61% responded that they have determined what their financial needs are at the time of exit. This presents an opportunity for advisors to engage clients in a discussion of their long-term financial goals. Further, advisors can share how to protect those goals should something unforeseen happen to them in the short-term that would jeopardize their financial security and business stability.

It is here that the role of business continuity planning becomes paramount. It provides a solid foundation to begin the planning process, regardless of when the owner is planning to exit, or even if they have engaged you to do a full Exit Plan. This planning goes beyond immediate concerns, encouraging business owners to view the bigger picture, focusing on both the preservation and growth of their businesses and the protection of their wealth.

Safeguarding Legacy and Fostering Peace of Mind

At the core of business continuity planning lies the goal of protecting the business should an event happen in the lives of business owners that prevents them from continuing to work in the business. It not only offers a safeguard for the businesses they have painstakingly built, but also promises peace of mind, knowing that their loved ones and employees will have a pathway to navigate through uncertain times.

Business continuity plans and instructions encompass critical components such as initial contacts to be made, actionable steps to be taken in the aftermath of the owner’s sudden departure, and outlines for management responsibilities. This roadmap aims to prevent a vacuum of leadership and direction, providing clear guidelines to steer the business through potentially turbulent phases.

Bridging the Gap to a Secure Post-Business Life

We mentioned previously that a majority of owners have determined their post-exit financial needs. Interestingly, business owners often harbor a misconception regarding their financial outlook. There seems to be a common belief that expenditures will reduce once they step away from their business roles. However, the reality often paints a different picture, with many finding that life post-business demands financial planning akin to, if not exceeding, their current spending patterns. When this misconception is combined with the other assumption that business owners make regarding the value of their businesses, it’s a recipe for financial disaster.

Once owners have a plan started based on realistic financial expectations and business value, and know how they are going to work with advisors to bridge that gap, it’s imperative to start asking the “what if” questions.

What if 3 years into a 10 year plan, the owner suddenly becomes ill and can no longer work in the business? What if the business has two owners, and one dies unexpectedly and the buy-sell agreement doesn’t address this type of departure? Is there a plan in place to keep the business running profitably so that the owner’s family is taken care of financially when there is a sudden loss of income? As you can see, it becomes imperative for business owners, even those who are reluctant to exit in the near future, to combine business continuity planning with a realistic and forward-thinking financial strategy.

Creating a Resilient Business: The Role of Advisors in Business Continuity Planning

Advisors play an important role in helping business owners develop a plan that is both flexible and resilient, able to withstand the challenges that might lie ahead.

Creating business continuity instructions is a critical step in this journey. In an ideal scenario, an Exit Plan unfolds seamlessly, transitioning ownership smoothly at the planned juncture. However, real-life is rarely that straightforward, with unexpected eventualities like death, incapacitation, or disputes throwing a wrench in the works.

Business advisors equipped to help business owners foresee these potential hiccups and formulate strategies to mitigate them effectively can show immediate value to their clients, leading to more comprehensive planning engagements. These strategies encompass a set of instructions that serve as a guide for family members and other stakeholders, addressing both personal and business challenges that may arise due to the sudden absence of the business owner.

The Bottom Line: Envisioning a Protected Future

Irrespective of business transitions timelines, business continuity planning emerges as a tool of empowerment, offering stability and foresight amidst uncertainties. It’s a clarion call to business owners to rise above the immediate hurdles and carve out pathways that ensure the protection of their legacies, fostering a future where their businesses not only survive but thrive in the hands of those who follow in their footsteps. Are you prepared to assist owners with this level of planning? Schedule some time with us to view how BEI supports advisors with content and tools to attract, engage, and plan with owners on the topic of business continuity.

Getting Good at What You’re Bad at

Posted on August 25, 2023 by admin

The Challenge at Hand

As a business owner, understanding your competitive advantage and leveraging your strengths are the catalyst behind business success. To sustain that success and grow to new heights, many business owners at some point must confront the things that they’re not so good—or even bad—at. Join us as we take a look at the following hypothetical story of a business owner who had to bolster some of her weaknesses in order to supplement her strengths and find success.

Jill Stork’s remarkable journey in the realm of online security software made her renowned among local accounting firms. Being a small business with a product she believed spoke for itself, she relied heavily on word-of-mouth referrals. This business model combined with her reservations about sales and financial management, spelled challenges for the future of her business and for her own financial future.

Enter you, the business advisor.

The Advisor’s Value Proposition

Jill’s situation is a classic case many advisors often encounter. Entrepreneurs possess a profound depth of knowledge in their craft but might lack the comprehensive overview to navigate the complexities of expanding or transitioning their businesses.

Her first step was meeting a financial advisor. While Jill loved to say, “I just want to program”, her dreams were broader: a life of retirement in Wyoming, ensuring her children’s higher education, and the joy of flying.

For business advisors, understanding a client’s core aspirations can be the foundation of a transformative strategy. The true value-add of working with an advisor skilled in Exit Planning is that you can help owners like Jill identify the gaps between her weaknesses and her future goals and plans.

While in this case Jill’s strengths were highly technical and specific, in order for her to make progress towards the post-exit life she desires she must broaden her scope. Owners like Jill need the guidance of a trusted advisor to be able to take a step back and look at the bigger business picture to include alternative sales models, additional revenue streams, and ways to improve business value.

Crafting a Blueprint for Success

Motivated by a recommended Exit Planning Advisor, Jill’s journey took a turn for the better once she placed a higher emphasis on development in the areas she was lacking.

As an advisor, here’s what you can offer to clients like Jill:

Vision and Expansion: Hiring a proficient sales manager can lead to building an efficient sales team, essential for business growth.
Operational Efficiency: Streamlining processes and scaling teams is another avenue to explore, ensuring a seamless business operation.
Financial Foresight: Directing investments with an eye on retirement and other personal goals can mean the difference between dreams achieved and opportunities missed.
Planning for the Long-Term: Instituting an estate plan and creating a business continuity blueprint can safeguard against unexpected challenges.

Why Every Business Owner Needs an Advisor Team

Jill’s success story, from expanding her clientele to the eventual sale of her company, highlights the monumental impact of having the right advisory team.

As a business advisor, your role in shaping, guiding, and executing such transitions is paramount. To learn more on the impact that an advisor team can have, check out our blog on Why business advisors are essential in planning for a successful future.

The Bottom Line: Elevate Your Advisory Role

Being a business advisor in today’s ever-evolving landscape means more than just offering advice. It’s about understanding, strategizing, and pioneering transformative journeys for your clients.

Recipe For Success: Building an Advisor Team

Posted on June 23, 2023 by admin

Just like every business is unique, so are the plans owners have for transitioning out of business. Their financial and values-based goals, the desired exit path, and their timeline are all specific to their personal and professional situation.

For these reasons, there is no one advisor that can successfully manage an entire Exit Plan from start to finish on their own. A team of experts is needed to successfully build and execute on the plan to meet the owners’ objectives.

Whether you want to take the lead in designing the Exit Plan and coordinating the team on execution, or you want to focus on performing your area specific tasks, there are opportunities for every type of advisor to make a significant difference in the lives of their clients.

By being in a network of advisors that can be called on when the time is right, you can save time by working with advisors familiar with your process, open up doors to working with new clients, and ultimately differentiate your practice from others that do similar work.

What other advisors are needed for an Exit Plan?

While this list is not exhaustive and does not include specialties within a profession, these are the most common advisors included on an advisor involved in Exit Planning.

Financial Planner
Insurance Advisor
CPA
Valuation Specialist
Business Attorney
Estate Planning Attorney
Transaction Intermediary
Wealth Manager
Business Consultant

When developing your network, there are certain characteristics you’ll want to look for when determining if a particular advisor will be effective on an Advisor Team.

Does the advisor have expertise in their profession? This perhaps goes without saying, but you’ll want advisors experienced in their profession in a variety of planning situations.
Does the advisor have experience with owners? Consider not only the number of years the advisor has worked with business owners, but also the type of work they do. For example, there is a difference in the experience of a CPA that does tax returns versus a CPA that works with owners on strategies for tax mitigation.
Is the advisor willing and able to offer suggestions informally? Oftentimes, Exit Planning Advisors will seek guidance from members of the Advisor Team over whether a recommendation is feasible before pursuing action or officially engaging the advisor on a plan.
Is the advisor deadline-driven? One of the key aspects of a successful Exit Plan is the owner leaving when they want. That is dependent on the Advisor Team delivering on time to not delay the entire planning process.

When is the Advisor Team involved in the planning process?

It would take more than the standard length of a blog post to list out all the possible scenarios in which each advisor type may get involved in an Exit Plan, especially when considering each unique exit path. However, we do want to showcase a few of the more common scenarios. For more on creating a comprehensive Exit Plan, check out this blog post on the BEI Exit Planning Process and working with an advisor team!

A financial planner will look at the business owner’s personal goals and lifestyle to determine how much is needed from the transfer of the business to meet that financial need.

Additionally, they can look at the current resources to determine if there is a financial gap between where the owner is today and where they need to be at the exit event. They are looking to answer if there is enough capital and assets, given the chosen exit path, to ensure financial independence from the business.

A CPA has a key role when determining the pros and cons of each exit path, specifically with regard to structuring the transfer to minimize taxes upon exit. CPAs are also involved in the valuation of the business for the purpose of buy-sell agreements, cash flow projections, and preparing financial audits for potential buyers. Having someone on your team to help the owner not only get the highest number for their business, but make sure they get to keep the most from that, is valuable to all members involved in the process.

It’s important for an insurance professional to look at the amount of coverage needed to fund lost income if the owner dies prior to their exit from the business. They will also review the estate plan to ensure consistency between the exit objectives and existing resources and make any modifications necessary for business continuity. An insurance professional will also analyze the need for key-person life insurance as part of preserving the business value.

Regardless of if the owner desires to transfer to an insider or sell to a third-party buyer, you’ll need an attorney on the team to draft necessary legal documents. For insider transfers, an attorney can support with purchase agreements, buy-back agreements, incentivizing key employees and designing buy-sell agreements for the new owners. In a third-party sale, you may need several specialized advisors, such as an M&A specialist, investment banker, or business broker.

These advisors will perform pre-sale due diligence to ensure a business is ready to go to market and negotiate the sale of the business. An attorney can also work with the owner on Non-Qualified Deferred Compensation plans to motivate and keep key employees as part of promoting business value.

Key Ingredients to Building an Advisor Team

Start building your team early. The earlier you have advisors in place, the easier it will be to get aligned in what the planning process looks like and each advisor’s role in that process.

As you can see just from the few insights provided in this blog, there is a lot to consider for each Exit Plan, and you will need to coordinate the activities of those advisors to ensure the recommendations are designed and executed in a way that allows the owner to leave their business when they want, to the person they choose, and for the money they need.

Business Owners Stepping Back to Grow Value

Posted on June 9, 2023 by admin

For many small business owners, they run the show. Owners often have too much on their plate to make any real progress. This includes creating a marketing and sales strategy, as well as taking on leadership roles such as President or CEO.

As business advisors, you likely encounter business owners with the belief that success only comes through relentless effort and complete control of their company.

However, the truth is that working harder and longer hours doesn’t always equate to stronger business value.

In fact, it can often hinder growth and limit potential to grow value exponentially. Throughout this blog post, we’ll dive into the concept of laying off the gas to grow business value. We’ll also explore the concept of stepping back to grow value and how delegating tasks can lead to exponential scaling and increased profitability for business owners.

We’ll even draw inspiration from the idea of taking summer trips as a test of how a business can run without its owner’s constant presence. For more on working less to create value, check out this Forbes Article!

Transitioning from Startup to Growth Phase:

In the early stages of a business, founders typically wear multiple hats and handle every aspect of the operation. This hands-on approach is necessary for a startup, but as the business grows, it can become a burden. As an advisor, working with your client to develop a business growth strategy can significantly contribute to their long term success and competitive advantage

To move past the startup phase, owners must shift their mindset from execution to strategy, vision, and growth.

The Art of Delegation:

When was the last time your business-owning client took some time off for themselves? Let’s take some time to run through the benefits of delegating tasks to employees.

Empowering Employees:

When a business owner takes a vacation, it creates a void that needs to be filled if they are too heavily involved in the day-to-day operations of the business. This presents an opportunity for the employees to step up and take on additional responsibilities. By entrusting them with new tasks and challenges, they are empowered to grow and showcase their leadership potential. This not only helps the business in the short term, but also creates a more confident and motivated team in the long run.

Developing Leadership Skills:

When owners take time away from the business, they provide a chance for their employees to develop their leadership skills. By temporarily, and eventually permanently, assuming some of the owner’s responsibilities, they gain hands-on experience and learn to make important decisions. This helps them gain confidence, improve problem-solving abilities, and enhances their overall understanding of the business operations. Furthermore, it cultivates a culture of continuous learning and development within your organization.

Identifying Potential Successors:

By advising that your clients take time to step away from the business, you are also presenting to them an opportunity to identify potential successors for key positions within the business. When they delegate tasks and responsibilities to different individuals, owners gain valuable insights into their strengths, weaknesses, and capabilities. This information can be crucial when considering a future business transfer or promotion. By identifying key employees and nurturing potential successors, you can help your clients ensure a smooth transition of leadership and safeguard the long-term success of their business.

Fostering a Collaborative Environment:

Stepping away from the business encourages employees to work together and collaborate more closely. With the absence of a business owner, individuals are more likely to seek input from their colleagues, share ideas, and work as a team to overcome challenges. This collaborative environment enhances creativity, problem-solving, and builds stronger relationships among team members. It ultimately leads to a more resilient and adaptable workforce.

Enhancing Employee Morale and Engagement:

Taking a vacation demonstrates that your clients trust and rely on their employees. This boost in morale and confidence can significantly impact their overall job satisfaction and engagement levels. When employees feel valued and trusted, they are more likely to go above and beyond to ensure the success of the business. Moreover, a supportive work environment promotes loyalty, reducing turnover rates and attracting top talent.

Building Systems and Replicating Success:

As entrepreneurs step back from day-to-day operations, they can focus on building systems, automating processes, and creating an organization that runs independently of their daily contributions.

With well-established systems in place, replicating success becomes easier. Opening new offices, branches, or locations becomes feasible without overwhelming the business. Economies of scale improve margins, and the business owner can refine and build upon their achievements.

Where Does Exit Planning Fit In?

What does all of this mean for the overall value of the business? When considering business value, especially in the eyes of a third-party value, they want to know they are acquiring a business that does not rely on the current owner for success. Helping your clients ensure they have a next-level management team in place to keep the business running during the transition of ownership is one of the biggest value drivers to a business. At the same time, encouraging your client to take time away will help them with the emotional side of transitioning out of the business they built because they can preview other activities or causes they are passionate about.

The Bottom Line:

Stepping back to grow value is a fundamental concept for business advisors to impart to their clients. By delegating tasks and focusing on strategy and growth, owners can unlock the true potential of their businesses.

Taking inspiration from the idea of taking summer trips as a test of a business’s autonomy, entrepreneurs can embrace delegation, build systems, and achieve exponential scaling. Remember, working less can indeed lead to making more.

Are you ready to guide your clients towards success? Start embracing the art of delegation and witness the remarkable transformation it brings to their businesses.

Why Should a Business Owner Work With a CExP?

Posted on May 5, 2023 by admin

You’ve put in the effort to recognize how essential it is to have a well-structured plan in place when a business owner is ready to leave their business. You know that, eventually, every business owner will want or need to exit their business, whether it’s for retirement, pursuing other ventures, or due to unexpected circumstances.

This is where hiring a Certified Exit Planner (CExP) can be invaluable to the business owner in helping achieve their goals.

What is a Certified Exit Planner?

A CExP is a professional who has undergone extensive training and certification in the field of Exit Planning.They have specialized knowledge in various aspects of business Exit Planning, such as financial planning, tax implications, legal considerations, and more.

They have the skills and training necessary to take individual components of a business plan and integrate them into the exit strategy. Interested in learning more? Check out this article from Yahoo Finance, All About Certified Exit Planners (CExP)!

Follow along for reasons why a business owner should work with a CExP, and why it can be a valuable addition to your Exit Planning toolkit:

Comprehensive Exit Planning

A CExP will work with the business owner to develop a comprehensive Exit Plan that considers all aspects of their business and personal finances. They will help identify financial goals, determine the value of the business, and create a plan to maximize its value upon exit. They can implement a comprehensive plan and bring in all the necessary experts to execute for the best possible outcome based on the owner’s financial and non-financial goals.

Expertise in Tax Planning

A CExP can provide advice on tax planning strategies to minimize the business owner’s tax liability upon exiting their business. They will also work with the tax advisor to ensure that the plan aligns with the business owner’s long-term financial goals and minimizes the impact of taxes on the exit.

Protection of Your Business and Personal Assets

An Exit Plan can help protect the business and personal assets from potential liabilities that may arise during the exit event or after the business owner leaves. A CExP can help identify and address any risks that could impact the business’s value and the business owner’s personal finances.

Increased Likelihood of Success

Working with a CExP can significantly increase the likelihood of a successful business exit. They can help navigate the complexities of Exit Planning and ensure that the plan aligns with the business owner’s long-term financial goals.

With their guidance, a business owner can create a plan that maximizes the value of their business, minimizes their tax liability, and protects their personal and business assets.

Peace of Mind

Having a comprehensive Exit Plan in place can provide peace of mind for both the business owner, their family, and the new owners. A CExP can help create a plan that ensures a smooth transition and allows the business owner to exit their business on their terms, with confidence.

The Bottom Line

Owners looking to begin planning for their eventual transition out of business should look for advisors that have this level of expertise. Obtaining an advisor that is not only knowledgeable in their specific field, but also in how all the pieces fit together and when the team works together to execute will save time, money, and potentially heartache during the exit. With their guidance, business owners can exit their business with confidence, knowing that they have a solid plan in place to achieve their goals.

A CExP can also help owners to identify potential exit paths, complete due diligence before preparing the business for sale, as well as ensure that the terms of the transfer are in their best interest. In addition, a CExP can help business owners to develop a plan to maintain their legacy after exiting the business.

Whatever the business owner’s goals are, a CExP can help them to achieve them.
If you are an advisor driven to help clients achieve their goals for exiting their business, the Certified Exit Planner Course may be right for you! Take the next step in your Exit Planning career, we invite you to learn more about obtaining a CExP. There is a better way to plan. Let BEI show you the path to success.