A number of months ago I wrote that Exit Planning was a disruptive innovation. What this means is that an idea - a technology, for lack of a better word - comes along and changes the worldview of certain players. This change in view takes time to be adopted by most. However, when the message - or technology - is strong enough, it breaks through and becomes mainstream and is widely adopted. This adoption cycle can be observed as a life-cycle for a new technology. We can view and predict how these types of innovations are adopted by looking back to certain other disruptive innovations, such as the automobile, cellular phones, or the Internet.
The exit planning industry is going through a similar life cycle and is on the verge of wide-spread adoption by the marketplace.
Four-Stage Technology Life Cycle
The adoption of a new idea by the marketplace of consumers can be illustrated as an S-curve, where three (3) stages of development occur. There is strong evidence that the exit planning industry is moving from the "Innovation Stage" and into the "Growth Boom Stage" of such a cycle.
The first phase of an a new product's Life Cycle is the "Innovation Stage". During this "Innovation Stage", the product or technology is expensive and more difficult to use and therefore only penetrates the more upscale and sophisticated users. This was true for automobiles (which none of us can remember), as well as cell phones and computers - which all of us can remember. I personally remember the first computer and cell phone that I owned. In fact, it's now laughable to think that in 1993 I used to have to worry about whether or not I shut off the AOL Internet connection because they charged by the hour. Not to mention the weight of my first cell phone, as well as the cost of my first computer. Despite those short-comings, adopting those technologies early, was empowering because a new way of working, connecting and communicating was developing and it helped greatly to be involved early on in these changes.
Once the product or technology is proven in such niche markets, it starts to become more affordable and accelerates rapidly into the mainstream . The first phase of this acceleration is called the "Growth Boom Stage" where exponential growth continues. This phase attracts many new products and companies, and they eventually expand too quickly and create excess capacity.
It is amazing how far we can advance in such a short amount of time when more and more industry players are focused on product development and improvement. This is what happens when a new product or innovation is widely accepted. Prior to that time period, it is the early adopters who disproportionately benefit from the use - or production and sale - of the product.
Today's Exit Planning Industry
I have the unique benefit of seeing the exit planning business emerge. My book, Exiting Your Business, Protecting Your Wealth - A Strategic Guide for Owners and Advisors [John Wiley & Sons, 2008] has now been selling for two (2) years and, with thousands of copies in the marketplace, and hundreds of professional advisors in our network of Membership, Workshops, and Chapter meetings, I am in a special position to observe and report on the state of the exit planning industry.
I believe that the Exit Planning industry is heading quickly towards the Growth Boom Stage where exponential growth occurs. I see this shift occurring in the next year to two (2) years, as our economy recovers and the Baby Boomer business owners begin to focus, in mass, on the need for them to exit their business.
Remember, the generation ahead of the Baby Boomers had the Boomer children to take over their businesses. These Boomers are too large a group (meaning the generation X'ers are fewer in total number) and the mindset of Generation X is not generally towards business ownership. This leaves fewer 'buyers' than 'sellers'. And, given our protracted recession and the need for these Boomers to monetize their largest asset, the demographics and economic cycles are also driving this demand.
Our 10-year transfer cycles (which has been written about in past newsletters) predicts that our economy, and a stable environment for business transfers, is coming over the next one to two (2) years - coinciding with the S-Curve for new product Life Cycles, and completing the evidence of a growing demand for exit planning services.
How You Can Get Involved
Your business owner clients and prospects need to hear this message so that they can stay ahead of the curve and be prepared for their exit. You have the opportunity to bring this unique service to your exiting owners once you have a solid system to work with, tools for discussion and presentation, and, perhaps even a deliverable to accompany the conversation.
I encourage you to join the hundreds of advisors who have benefited from Pinnacle's 2-day workshops to educate themselves on the marketplace of exiting owners and to incorporate exit planning into their practices. We have an upcoming workshop preview call that describes all of this and I encourage you to attend to learn more about how you can more effectively make exit planning a part of your business.
As always, I hope that this newsletter is helpful towards keeping you focused on exit planning and assisting you with putting it into your advisory practice.
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