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Tag: Exit Planning Strategies

Championship Advisor Teams: A Super Bowl Strategy for Exit Planning

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It’s Super Bowl Weekend! As the San Francisco 49ers get ready to take on the reigning champs in the Kansas City Chiefs, business owners around the country are looking to exit their businesses, but might not have the right resources to reach all of their goals at the time of their exit.

For each team playing on Sunday, it’s taken grit, perseverance, and hard work to be able to perform on the biggest stage in sports. It’s no different for business owners, who dedicate their lives to something they believe in. Just as professional sports organizations carefully select each player when developing a championship-caliber team, assembling an advisor team for business Exit Planning is an essential process for generating exit success.

Every business owner’s exit strategy is as unique as the teams that compete for the Super Bowl, with specific financial goals, values, and timelines. Leaving a business carries countless implications that affect more than just the business owner: For instance, an owner looking to exit their business needs to consider whom he or she will transfer the business to; how taxes will affect the net sale price; how he or she can make sure that key employees don’t sabotage the sale; and how to distribute wealth from the sale among family, charity, investments, and self.

Just as no single player can win the game alone, successfully creating and executing an Exit Plan typically requires expertise from several advisors from different professional fields. That’s because no single advisor has sufficient expertise or experience to create and implement all of the activities required in a typical Exit Plan. In many cases and throughout our history as thought leaders across the Exit Planning industry, a collaborative effort from a network of seasoned professionals is essential for success. 

Across all sports, bench players have an important role in relieving starting players in special situations, such as when the bench player excels over the starter in a specific circumstance. That’s precisely what your Advisor Team does. While the Exit Planner often takes the lead for the overarching Exit Planning Process, the Exit Planner knows when to insert his or her bench players to maximize performance and output, giving the team’s owner (i.e., the business owner) the best chance to succeed. Let’s take a deeper dive into the Exit Planning end zone and how each professional plays an integral role in ensuring a successful exit.

The Game Plan

The Quarterback: The Exit Planning Advisor

In this strategic game, the Exit Planning Advisor acts as the quarterback, calling the plays and coordinating the team’s efforts towards achieving the business owner’s exit objectives. This role demands a comprehensive understanding of the owner’s goals and the ability to lead and integrate the efforts of various specialists.

The Offensive Line: Financial Strategists

This line-up includes Financial Planners, CPAs, Valuation Specialists, and Wealth Managers, each tasked with protecting and maximizing the owner’s financial interests. Like any football team’s offensive line, they work in unison to create a strong defense against financial vulnerabilities, ensuring the business’s value is optimized for exit.

The Defensive Team: Legal and Risk Advisors

Business and Estate Planning Attorneys, along with Insurance Advisors, form the defense, mitigating risks and ensuring the owner’s legacy is preserved through carefully crafted legal strategies and protective measures. Their expertise is crucial in navigating the complexities of business continuity and legal compliance.

Special Teams: The Niche Experts

Niche advisors, including Business Consultants and M&A Specialists, are the special teams, bringing unique skills for specific challenges. Their involvement can make the critical difference in preparing the business for a successful transfer or sale.

Building the Team

Identifying MVPs

When selecting advisors for your team, prioritize expertise, experience with owners, willingness to provide informal advice, and a deadline-driven approach. These qualities ensure that the team can effectively address the unique challenges and opportunities of Exit Planning. Having an advisor team full of MVPs is also a differentiation strategy for you and your services as owners want to work with advisors and advisor teams they can trust to help them achieve their goals! 

The Strategic Playbook

For a deeper dive into building engagement and advisor teams, check out our blog on  Building Engagement & Advisor Teams One Step at a Time. This resource provides valuable lessons on forming a cohesive team that can navigate the complexities of Exit Planning together.

Execution for the Win

Remember, it’s never too early to plan for a business exit! Starting the team-building process early is key to aligning strategies and ensuring that each advisor’s role is clear. Check out this article From Entrepreneur answering the question, When Should Business Owners Start Developing an Exit Plan? This approach not only streamlines the Exit Planning process but also opens new opportunities for client engagement and sets your practice apart in a crowded field.

Engaging Owners Before, During & After Transition

As we inch closer to kickoff, remember that like a championship team, a well-coordinated group of advisors is essential for navigating a business owner through a successful exit. With the right team in place, business owners can achieve their exit goals, ensuring a legacy that endures beyond their tenure. Connect with us on LinkedIn, Facebook, and Twitter for more insights and updates!

Using BEI’s New Planning Software & The Importance of Technology in the World of Business Planning 

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Businesses are unique, not only in what they offer their customers, but in their operations, their use of technology, their culture, and the vision their owners have for the future. As a business advisor, you play a pivotal role in helping owners make decisions related to key areas such as cash flow management, business continuity, succession planning, and growth strategies. To help owners navigate challenges, seize opportunities, and make informed decisions, you need more than industry knowledge to become that trusted advisor. At BEI, we believe that providing advisors with the tools to deliver custom solutions to their clients and a tangible path forward to reach their goals is indispensable to streamlining your work and impacting your clients’ lives. That’s why we are excited to announce a new software and the ways we provide the most valuable business planning software on the market.

EPIC is Now PlanIt

The BEI team spent months collecting feedback and suggestions about our previous software, EPIC, and what areas needed improvement.  We brought in a talented technology team to build a brand-new platform called PlanIt to improve user-design, enhance planning functionalities, and implement features that would best benefit advisors like you. 

What’s New?

While much of PlanIt has the same functionality as EPIC, we have made a few improvements during development prior to launch. PlanIt has a new, sleek design with a more intuitive path for planning work. 

For a guided demo of PlanIt with BEI CEO Jared Johnson, watch the recording of his latest webinar!

Webinars

Data-Driven Decision-Making

One of the primary reasons for utilizing software in your planning practice is the ever-increasing importance of data in prioritizing tasks, managing teams, and executing on your clients’ plans. Having a software to manage multiple clients and multiple plans enables you to track progress with your clients and make decisions based on their specific recommendations. With this new software release, advisors will have a comprehensive view of their planning activities and better visualization of the progress being made. 

**For illustration purposes only**

Time Efficiency through Collaboration

Time is a precious resource, and business advisors often must juggle multiple clients and projects simultaneously. Utilizing the right software can significantly enhance your time management capabilities, especially through team communication. Within PlanIt, advisors can send messages to other advisors on the client team, enabling real-time communication without the need for phone calls or lengthy email exchanges. This streamlined approach fosters efficient collaboration while working on a plan, allowing advisors to free up time to focus on strategic thinking and value-adding activities for their clients and their practices.

Customized Recommendations and Reporting

Your clients are not looking for a “one-size-fits-all” strategy for their business. Being able to provide customized recommendations and planning documents is what sets you apart and builds that relationship and trust between you and your clients. PlanIt takes personalization to the next level by providing recommendations based on specific owner objectives and company requirements. Whether you are working with multiple owners, multiple companies, or a combination of both, you can create truly customized plans tailored to each owner and company’s unique needs.

Want to learn more? Book a meeting with a member of the BEI Team for a demo of the PlanIt software!

Taking a Step Back: Recognizing the Role of Technology as an Advisor 

We are confident that PlanIt will provide you with an efficient and effective planning tool to use with your business owner clients. However, it’s also worth noting the broader reason for the need to invest in a planning software such as PlanIt in that the role of technology in the advisory services space is increasing at a rapid pace. 

In an evolving business landscape with more owners than ever before thinking about their eventual exits, the role of business advisors is more critical than ever. Software has become an essential companion for advisors, enabling them to harness the power of data, streamline their workflow, and provide strategic guidance that drives success. By investing in the right software tools, business advisors can not only enhance their own capabilities but also deliver superior value to their clients. 

Consider the benefits that a technology solution would bring to your practice: 

1.    Data Driven Decision Making

One of the primary reasons advisors need specialized software is due to the ever-increasing importance of data in decision-making. Businesses generate vast amounts of data each day – from sales data and financial records to customer data and market trends. To provide the most effective advice, advisors must have the means to collect, analyze and interpret this data quickly and accurately. With the right software, data analytics and visualization capabilities allow advisors to make data-driven recommendations that drive success.

2.    Time Efficiency 

Time is a precious resource, especially because advisors often have to juggle multiple clients and multiple projects simultaneously. Specialized planning software can significantly improve time management capabilities helping advisors plan their workload, track progress, and meet deadlines. Customer Relationship Management (CRM) software streamlines client communication, making it easier to stay organized and responsive. By automating tasks and processes, advisors can free up time to focus on strategic thinking and value-added activities. 

3.    Market Research & Competitive Analysis 

Successful advisors must stay ahead of industry trends and understand their clients’ competitive landscapes. Specialized software tools provide access to vast databases of market research and competitor information. Technologies can help advisors identify emerging trends, benchmark client performance against industry standards, and uncover new opportunities. By having real-time access to market data and analysis, advisors can offer proactive insights that drive competitive advantage. 

4.    Financial Modeling & Forecasting 

Financial expertise is a cornerstone of effective business advising. Specialized financial modeling and forecasting software empowers advisors to create detailed financial projections, scenario analyses, and budgeting plans. These tools enable them to assess the financial health of a business, identify potential risks, and devise strategies for growth and profitability. With accurate financial modeling, advisors can provide clients with a clear roadmap to achieve their goals. 

5.    Compliance & Risk Management

In today’s regulatory environment, businesses face an ever-growing list of compliance requirements and risks. Specialized software can help advisors keep up with changing regulations and be sure their clients are in full compliance. Moreover, risk management software provides tools to assess and mitigate potential risks, from cybersecurity threats to market volatility. This proactive approach safeguards both the advisor’s reputation and the client’s business. 

6.    Client Collaboration & Reporting 

Effective communication is vital in the client-advisor relationship. Specialized software often includes collaboration and reporting features that make it easier for advisors to share insights, progress reports, and recommendations with clients. These tools enhance transparency and foster stronger client-advisor relationships, leading to greater trust and long-term partnerships.

Conclusion

In this digital age, staying ahead means staying equipped with the right technology. At BEI, we’ve worked with hundreds of advisors over the years, listening to how their challenges and roadblocks evolve with the emergence of technology and the nature of working with the modern-day business owner. That is why it was so important to us to design PlanIt in a way that works best for the advisor, allowing you to provide the most effective guidance to your clients in the most efficient and manageable way. 

Live Demo: Planning Solutions Made Simple with BEI

Niche Marketing: The Indispensable Advisor

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In the realm of business and transition planning, carving a niche isn’t merely a marketing strategy; it’s an avenue to becoming indispensable. 

At our recent BEI National Conference, BEI Members, David Jean, CPA, CCIFP, CExP, of Albin Randall & Bennett and Matthew DiFrancesco, CExP, CAA, of High Lift Financial, hosted a session that shed light on the power and process of engaging in a niche market for advisors, especially those aiding small business owners in transitioning their ventures smoothly to the next generation. 

Throughout this blog, we’ll highlight key aspects of niche marketing and insights aimed to equip advisors with a renewed perspective on engaging clients in niche sectors.

Transitioning into a Niche: A Natural Progression

A recurring theme among small business owners is the concern about the legacy of their business, particularly when it involves family. Many owners ask themselves, “What will happen to my company when I’m no longer here?” In niche markets, owners typically want to transition their businesses to their children. 

Across the country, passionate, independent owners are looking for ways to grow their businesses and eventually pass it on. As owners realize the options within business transitions, advisors have the opportunity to establish themselves as the knowledgeable source in succession planning. 

So, what can you do as a business advisor to establish yourself in a niche industry? 

Longtime BEI Member David highlighted his experience working with contractors and his seamless transition into Exit Planning for this specific sector. His firm’s established reputation in accounting and taxation in their area presented a solid groundwork for marketing succession planning services to contractors. 

As you begin to research niche industries in your area, are there opportunities to leverage your existing reputation and clientele as you venture into expanding your services by adding Exit Planning? Are there common trends with your clientele that you can lean into and use in your marketing message to usher these businesses into the next generation? 

Find Your Passion 

David and Matt both emphasized the importance of being passionate about the chosen industry. What is it that drives you? What types of clients do you want to be working with?  They cited examples from the collision industry, where independent owners are deeply invested in their businesses and are scouting for growth and transition strategies amidst a surge in industry consolidation. Such real-world scenarios are fertile grounds for advisors to plant their expertise, grow relationships, and reap the rewards of being a go-to advisor in that domain.

The journey from general financial planning to becoming an authority in Exit Planning for a particular industry is not devoid of challenges. It entails starting with a small client base, dedicating time to understanding the industry intricacies, and progressively building a voice within that sector. 

David Jean was spurred into becoming a Certified Exit Planner (CExP) after encountering a client with a severe health condition. The family’s unpreparedness in managing the business post-crisis illuminated the necessity of Exit Planning, consequently reshaping David’s practice to better serve his clientele.

The Benefits of Niche Marketing

As you become the expert advisor in your industry, you’re better able to understand the intricacies and special considerations involved. Furthermore, diving into a niche market allows you to:

  • Do what you’re comfortable with by combining your passion with your skillset 
  • Develop customized cross-selling solutions across your industry
  • Identify risk and key issues early on in the planning process

Furthermore, with a niche, you have the opportunity to expand your message by getting onto industry specific podcasts to network and foster relationships with industry influencers. You can also look at trade publications and associations to provide written content and bring awareness to the importance of transition planning and how your expertise is invaluable to those business owners. 

Building Credibility in a Niche Industry 

Transitioning into a niche might feel like a dive into the deep end, but remember, ‘people don’t care how much you know until they know how much you care’. Building a competent team, engaging with the industry stakeholders to understand their pain points, and offering services geared towards the goals and challenges of a specific industry can help in establishing yourself in the market. 

The roadmap to becoming an expert Exit Planner in a niche industry, as portrayed in the session, hinges on a blend of passion, leveraging an existing reputation, understanding the industry deeply, and employing strategic networking and knowledge-sharing platforms like podcasts and articles.

The Bottom Line 

Delving into a niche isn’t just about a narrowing focus; it’s about amplifying your impact and value in a way that resonates profoundly with clients in need of expert guidance on possibly one of the most critical transitions in their business lifecycle.  

The BEI Advisor Network is an excellent resource for professionals like you, connecting advisors with the right industry or expertise, enabling a collaborative approach towards offering more value to clients. Schedule time with the BEI Team to learn more about becoming a member of our network.

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Business Continuity: Protecting Client Value

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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. 

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Getting Good at What You’re Bad at

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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.

Navigating Emotional Challenges in Exit Planning

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Chasing The American Dream

The United States has always been known as the land of opportunity and new beginnings. For many, families moved to the United States with limited resources and built their own businesses from the ground up. As families grew, family-owned businesses grew with them, establishing community ties and contributing to the economy.  

The American economy is largely supported by family businesses, generating over 78% of jobs and contributing to 58% of the country’s GDP (Hiebert, PhD, CFP). But, what happens when a family business owner can no longer run his or her business at its maximum potential? 

What can you do as a business advisor to convince your potential clients that implementing an Exit Plan benefits both the business and their family? 

This blog post explores a study published by Daniel Hiebert, PhD, CFP which focused on   emotional and psychological factors that contribute to Exit Planning challenges in family businesses, and highlights the importance of involving experienced Exit Planners to ensure successful transitions between families and their businesses. To read the full article, click here: Emotional Attachment and Decision by Family Business-Owners to Seek Help From a Succession Planner.

The Emotional Component: Letting Go of the Business

One significant factor compounding the problem of transition failure lies in the emotional and psychological attachment of business owners to their enterprises. Many owners find it difficult to let go, neglecting the necessary planning for a successful transfer. 

In many cases, the relationship between an owner and their business becomes quite similar to a relationship between a parent and their child. Similarly to a parent nurturing their child up until adulthood, owners often build their firms from a blank slate. 

When it comes time for a parent to send their child to college or into the next chapter of life, attachment anxieties arise. The same argument can be made for owners and their businesses as they grow anxious about a business transfer. 

Furthermore, family relationships intertwine with business management and ownership issues, creating a complex web of emotions and goals that can hinder the planning process and further estate planning. The business becomes intertwined with the individual’s identity, making it harder to separate personal and professional aspirations.

Overcoming Emotional Barriers: The Role of Exit Planners

To address the emotional challenges associated with Exit Planning, family business owners must seek the guidance of experienced Exit Planners. These professionals possess a comprehensive understanding of both financial planning along with non-financial goals, allowing them to guide owners through the transition process. 

Research from the article suggests that emotionally attached owners are less likely to seek help from planners, even though their businesses stand to benefit the most from professional guidance.

Key Findings and Challenges:

Various factors contribute to the emotional struggle of letting go and the subsequent planning challenges in family businesses. We’ve highlighted some of these key obstacles below:

  1. Doubt in Successor’s Ability: Owners may cling to their businesses due to a lack of confidence in their successors’ capabilities to effectively run the company. The fear of potential failure can hinder the planning process. As an advisor, it is your job to facilitate the introduction of a well-equipped candidate. Check out our recent blog, Selecting the Best-Suited Successor to the Business Owner for tips and best practices! 
  2. Family Relationship Turmoil: Turbulence within family relationships, conflicts, and disagreements can complicate the transfer of a family business. Emotional dynamics can overshadow logical decision-making, making it harder to plan for the future.
  3. Heirs Choosing Different Paths: When heirs pursue alternative careers or have no interest in continuing the family business, owners may face significant emotional turmoil. For owners who have counted on their child(ren) taking over when the time comes, whether for trust or legacy reasons, it can be disappointing to have to accept the reality of giving up the day to day work that has driven them for years. Owners may struggle to reconcile their desire to maintain the business with their heirs’ divergent aspirations.
  4. Clinging to the Past vs. Embracing the Future: Family business owners who have witnessed their enterprise grow from humble beginnings often find it challenging to detach themselves emotionally from the business. They may view the company as a symbol of their journey, making it harder to embrace change and plan for the future.

The Role of the Exit Planner: An Opportunity to Overcome Emotional Attachments

Exit Planners have a unique opportunity to address the emotional challenges faced by family business owners. Advisors benefit from continuous involvement in the creation of Exit Plans. By understanding the owners’ attachment to their businesses, planners can qualify potential clients based on their emotional readiness for succession planning. 

As an advisor, this presents an opportunity to save time and resources, or work with that owner to overcome their attachment. Avoiding Exit Planning Mistakes can be challenging, check out that blog post for tips and resources to become indispensable! 

Additionally, advisors can work with owners to help them overcome emotional barriers, encouraging them to shift their perspective from the past to the future. This approach not only supports successful business transfers but also presents an opportunity for Exit Planners to market their services effectively. 

You can collaborate with your clients to strategize and plan for the future, providing them with insightful recommendations on how to effectively allocate their time and resources. Owners that gradually detach themselves from the business are able to see the big picture, facilitating a smoother business transition.  

The Bottom Line 

Emotional and psychological factors significantly impact Exit Planning in family businesses. Letting go of a business can be an emotional struggle for owners who have dedicated their lives to its growth and success. Owners often shy away from enlisting the help of experienced advisors the more emotionally attached they are to the business. 

Conversely, failing to plan for the eventual exit from can result in loss of business value, resulting in adverse effects on the company culture and value, local economy, and ultimately the personal goals for the owner’s family.

However, involving experienced Exit Planners who understand the intricacies of family dynamics and possess the skills to address emotional challenges can pave the way for a successful transition. By overcoming emotional attachments and embracing the future, family businesses can secure their continuity, contribute to the economy, and preserve their cultural legacy. 

Legacy Planning in Your Exit

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Business owners work hard to build their business into a successful enterprise. They’ve created a strong culture, built a reputation in the community, and provided jobs for many people. 

But, what happens when it’s time to exit the business? How can you properly plan with your clients to ensure that their legacy will continue, and that their non-financial goals will be met? 

When it comes to building a legacy after retirement, Avoiding Exit Planning Mistakes early on in the Exit Process can save your client both time and money. 

How your client defines their legacy is a major aspect of planning a business exit. Beyond creating financial goals and establishing financial security, it involves identifying non-financial goals for the business, such as preserving company culture or maintaining a positive reputation in the community. Join us as we dive into a few quick tips for defining non-financial goals in your client’s legacy plan.

Defining A Legacy:

Identify the company culture: What are the values that have made your client’s  company successful? What makes their workplace unique? By identifying the company culture, you can ensure that it is preserved after they exit out of the business.

Consider community involvement: Has your client been involved in their local community? Do they support local causes or charities? By including community involvement in your client’s legacy plan, you can assist in ensuring that the business continues to be a pillar in the community. 

When thinking about ways to make a lasting mark post-exit, consider donating a portion of the business’s profits to a local charity or creating a scholarship fund for local students. Planning efforts such as these will ensure that the business will be remembered for years to come. 

Additionally, your client can ensure that their business’s resources are being used to benefit others by dedicating a portion of their profit to causes that are important to the company and its employees. By taking the time to consider the community’s needs, you can ensure that your client’s legacy is a lasting one.

Think about employees: Employees are a crucial part of any business’s success. Consider their needs and concerns when defining your client’s non-financial goals. This could include providing them with job security or ensuring that their benefits are not impacted by the business exit.

Depending on the emphasis you believe that your employees have on the continued legacy of the business, your chosen exit path might inherently put your legacy in the hands of your employees (or children). For example, owners who opt for an Employee Stock Ownership Plan (ESOP) or an insider transfer to a key employee have likely made that choice in part due to the implications that path can have on one’s legacy. 

Set clear expectations: Make sure that all non-financial goals are clearly defined and communicated to all parties involved in     the business exit. This will help ensure that the business owner’s legacy is preserved and that non-financial goals are met. This includes setting expectations with the owner’s family and communicating the goals and how they may impact how they believe this transition will occur. With enough time and proper planning, an owner can meet their non-financial objectives while also meeting the financial goals to provide for their family post-exit. Making any assumptions about how the family feels about this plan and the family legacy the owner is leaving can derail the process, so it’s best to make those intentions known early on.

It is important as the Exit Planning Advisor to be upfront with your business owning client early on in planning meetings and conversations. Complete communication is imperative to form and shape the Exit Plan effectively.

Leaving a Legacy Post-Exit

In addition to defining non-financial goals, it’s important to consider how your client’s legacy will be passed on. This could include passing their business down to a family member or selling it to a new owner who shares the same values and vision for the business. Check out this article from Forbes to see first hand how important planning a legacy can be for future generations. 

Legacy planning is not just about financial planning. It’s about defining non-financial goals and ensuring that your client’s legacy continues after they retire and exit their business. By identifying and contributing to company culture, community involvement, and employee needs, your client can work with you to create a plan that will help leave a lasting legacy and establish the owner as a pillar in the community for years to come.

It’s also important to consider how your client’s legacy will be maintained after they leave. This could involve a succession plan that outlines how the business will be managed in the future. It could also include a plan for ensuring that key employees remain with the company after the owner departs.  

The Bottom Line

By doing your part to help build a lasting legacy, you have the opportunity to be a part of something that will benefit not only your client’s business, but the community around it. From setting up a trust or endowment to providing financial assistance to future generations of their family and others, there is room to be creative in planning for this type of exit goal. As stated in the aforementioned Forbes article, “Don’t wait – life’s too short not to leave your legacy how you want to leave a legacy.” 

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