In my last newsletter I introduced the No Owner Left Behind initiative that is inspiring Pinnacle's upcoming Certification Program. Those who are gathering behind this cause know that today's business owner is largely without a solid plan for the exit from their business, despite the fact that it is the most important financial (and lifestyle) transaction of their lives. As advisors, the delivery of this message begins with an 'exit conversation' with your business owner prospects and clients. This is where the 'rubber meets the road' - whether you are willing and able to begin this conversation and to follow through on delivering this solution to owners. Today's topic, therefore, is 'talking the language of 'exits''.
The Exit Conversation
From the outset, it would appear to be a simple enough question for you to ask an owner - simply 'have you thought about how you are going to exit your business?' In fact, my experience shows me that most advisors are reluctant to ask this question because they do not have a solid foundation to hold the conversation.
Well, that is what our training program and materials are built to do for you, but I wanted to give you some tips on how to make these exit conversations more effective for both you and your owners.
Convincing versus Compelling
When you begin to ask the exit questions, you need to ask yourself whether you are being "convincing" or "compelling" with the series of questions that follow the initial one. People ask me all of the time how I get certain results with owners. A large part of being effective is avoiding being 'convincing' - which means simply stating the facts and reasons why an owner should have an exit plan. Rather, you need to have a "compelling" way of presenting this material.
Like most decisions that are made, the decision to plan an exit is largely an emotional - not a logical - one. You need to understand this concept and prepare for these conversations in the right way. You need to be able to have enough information and deliver it in the right way to motivate your business owner to take action. For better or for worse, this is not usually accomplished through the simple delivery of facts and statistics. Your experience and stories of owners who did not plan for their exit are very helpful. Remember that your owner has worked their whole life to get to where they are. For a small fee and a bit of their time, you are in a position to move their thinking towards and exit - away from the simple running of their business alone. Delivered properly, the conversation should conclude with the business owner now having a compelling reason (or reasons) to take action.
Serious consideration and preparation should be given to this level of conversation to determine how to deliver it. With today's recession looming in each owner's mind, you need to be innovative and reconstruct your approach appropriately. Your primary objective is to assure your owners that you want to help them with their exit as well as protect their illiquid business wealth. Creating trust and assurance that you have the tools and knowledge to guide the business owner through their personal and business exit planning builds your clients' confidence in you and motivates them to take action through your compelling delivery.
Building Value Into Your Conversations
In order to be compelling you need to learn to build value into your conversations. The key is to ask the right questions at the right time. As an advisor/planner you need to look beyond any single issue that may be most important to you and ask what it is that the owner cares the most about. This basic idea of being 'client centric' is essential for this initial conversation.
Because of the lack of awareness and the owner's psychology in dealing with this issue, I often say that business owners 'do not know what they do not know'. Hence, the need for you to open the conversation and help them understand that with proper planning options are available to them to help with their exit. Communicating with your business owners about the problem that they are about to face and the benefits of agreeing to exit planning adds value. If you exude confidence and reveal that you are a well trained individual, your relationship with the business owners will grow quickly as they immediately sense that you are bringing value to their lives.
Owner Coming to Their Own Conclusions
One of the most intricate and challenging areas for delivering this exit conversation is your ability to be patient as your owner comes to their own conclusion about the steps that they need to take. If you have delivered merely a 'convincing' reason for them to move ahead, they will likely delay coming to a conclusion about moving ahead. However, if you have presented a "compelling" reason for your owner to advance, you have aided them in an important way in seeing more clearly the reasons for planning their business exit.
Business owners care about results, not rhetoric. It is the emotional connection that you create with them and the language you utilize that helps them to see the error in not planning for their exit. Owners have made their own decisions throughout their careers. They will decide to plan for their exit once you have presented the material in a way that allows them to conclude that an exit plan is both necessary as well as beneficial for them. You cannot force-feed this material to owners.
Making a Commitment to the Process
You will know that things are really happening with your exit conversations when owners begin to move ahead with you. In my work with owners, I require a retainer check in order to begin our work together. Interestingly, the retainer check represents much more than payment for a service - it represents the owner's commitment to take this process seriously. This, more than other part of the conversation, is critical to a successful exit. The owner needs to be invested in the process and ready to accept your guidance as they navigate this complex journey.
You will know that you are really "talking the language of exits" when you begin to generate results in the form of owner commitments to the process. You build on each conversation with every owner in order to strengthen you abilities to have these conversations. Your exit planning practice grows exponentially once you discover the right mix of facts and stories to help motivate your owners to take action.
In closing, the battle for exit planning is taking place at the initial conversation stage. "Talking the language of exits" is most important today in order to deliver this important message to owners. I look forward to sharing more on this topic with those attending our Nov. 5th & 6th Workshop in Boston.
Wishing you the best of success with your exit conversations.
Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide advisors with the tools they need to incorporate Business Exit Planning into their advisory practices. To learn more about John's Exit Strategy Services and to receive a FREE copy of his special report, "How To Incorporate Exit Strategies Into Your Advisory Practice", visit Pinnacle Equity Solutions