A business owner’s most significant asset almost always is the business. They need that asset to benefit them when they’re ready to exit. But, far too often, it doesn’t because value, and the lack thereof, is not a central part of their quarterly plans and weekly work. As exit planners, we have to place value at the heart of every conversation with our clients.
All Our Client Conversations Must Be About Value
As value advisors, we ensure that the business is ready for an exit to survive and thrive without the owner being at the helm. To achieve this, we work with the business owner to build sustainable business value. We create business value so that:
- There is higher profit at the time of exit.
- The end objective (i.e., growth of the business) is achieved.
- New systems (incorporated to build value) have improved the business’ organization and operation.
Building business value is fundamental to an owner’s exit plan, which provides the guidance needed for building value. When we talk with our clients about exit planning, the conversation should always begin with value. Some critical questions we have to help them answer:
- What is the current value of the business?
- What end goal value must the business achieve for the owner to reach their targeted lifetime income and other goals?
- What strategies will be used to bridge the gap between the business’s current value and the targeted value at exit time?
- How will you help the owner transfer the business value efficiently and effectively?
These conversations make value the heart and soul of our client interactions.
Putting Priorities in Order
Many entrepreneurs don’t start their businesses with retirement goals in mind. They focus on more immediate concerns and may not realize the business’s future value is of utmost importance. That’s where the valued advisor comes in. When value advisors fail to prioritize the issues most important to their clients, those clients often invest crucial time and energy in resolving problems that bring little or no gain to the business on the whole. To make their exit plan more successful, it’s essential first to address the utmost importance to the business owner–value being by far the biggest one.
According to a study conducted by Morningstar Research, clients most value an advisor who helps them reach their financial goals. On the other hand, surveyed advisors believe their clients’ top priority is an advisor willing to understand who their clients are and their needs.
The similarity of their responses conceals a subtle and significant difference of focus. Advisors tended to focus their discussions on the details of a financial plan; business owners want value advisors to focus on their goals.
Building business value is usually the most important part of every exit plan. As exit planning consultants, we have to start and end every conversation right there.
Download the Exit Planning 2.0 Manifesto
Value Scout is built on recognizing that we, as value creation advisors and exit planners, have a unique and rare opportunity to help our clients achieve something they’ve only dreamed about – a successful transition on their terms. To accomplish that mission, we have to hold ourselves accountable to a high standard, a set of memorable beliefs that guide our work and everything we do. We call them the 8 Proclamations of the Value Advisor.