As a business advisor, I often come across enlightening articles written by other professionals in the industry of business advisory and planning. Sometimes the articles are long and too complicated for the layman, and other times, they are short, sweet and hit the key points right on the nose. Almost always, they are reaffirming of my understanding of a seller’s needs, worries and perspectives.
Recently, he wrote an article that sums up a few points that I often make when speaking to a new client who is just getting started on the preparation for passing their business onto the next owner. What is my job as an advisor? What is the seller’s perspective on preparation? Why did the business owner contact me when they did?
John Brown’s words below caught my attention, and although over a decade in the business has given me a ton of insight and a “put yourself in their shoes” mentality, I enjoyed reading this simple yet concise piece. I hope that you will find it to be relative and informative as well.
How to Make Planning Easier for Everyone Involved
“Planning for a successful business future is a constant necessity. It’s also something business owners sometimes tend to push into an indeterminate future. Given all the responsibilities that go into running a successful business, it’s easy for owners to acknowledge that planning is important but not do much outside of acknowledge that fact, especially when they don’t know anyone who can make planning easier for them.
For many owners, planning is a matter of prioritization. When they don’t see the immediacy of planning for a successful future, they tend to view planning as a less important priority than whatever else they’re dealing with. This well-intentioned procrastination can relieve short-term stress, but it often creates long-term problems as owners age, their businesses evolve, and their inevitable business exits approach. How can owners fit planning for a successful future into their daily routines?
The answer lies in their advisors. Advisors to business owners have a duty to shoulder the glut of planning for a successful business future. The challenge for advisors is finding a way to get owners involved and committed to planning for a successful business future. There are three things advisors can begin doing to make planning easier for everyone involved.”
Put It in Owners’ Terms
As is the case for many big decisions, owners will likely need to feel emotionally compelled to act. It’s determining what makes each owner tick that’s the challenge. Some owners may choose to act if they feel anxiety about how their families will thrive once they retire. Others may act with the aim of creating a legacy to be proud of. Finding the pain point, whatever it may be, is where good planning for a successful future begins.
It’s easy for advisors to fall into the trap of telling owners why they should begin planning. They may read the tea leaves that say, “If this owner doesn’t do X, Y, and Z, there’s no way they can exit on their terms,” and then try to explain those facts to owners. The problem with this strategy is that owners may not care about what the advisor thinks should happen per se, especially if they feel like someone is telling them what to do. Logic alone rarely inspires change. Only after the owner internalizes the situation and feels compelled to act of their own accord can advisors begin to offer solutions.
How can advisors determine the terms that owners care about though?
Ask the Right Questions
It is not the answer that enlightens, but the question. –Eugene Ionesco
When advisors ask the right questions, it opens a treasure chest of possibilities. Foremost, asking the right questions gives advisors the information they need to address issues in planning for an owner’s successful future. Owners are more likely to open up about what they want, verbalize their goals, and share the challenges they face when advisors frame their questions correctly.
Asking the right questions allows for much more than just fact gathering. It also helps advisors establish that they’re trustworthy. Planning to make necessary changes to an already successful business can be fraught with confusion and doubt. When advisors ask the right questions, they can prove to owners that they are working for the owner’s interest, not their own, and that the advisor and their team will only make recommendations that address the owner’s goals.
Equipped with the right questions and understanding the owner’s terms of engagement, advisors can finally do what they’re trained to do.[/box]