Baby boomers are getting ready to retire and asking more of their accountants

Accountants are indispensable to the business owner clients they serve. One recent survey found that 40% of business owners consider their accountant their most trusted advisor. As those owners start thinking about how they will exit their businesses or transition to the next generation, they are turning to their accountants for help.

That means accountants who can guide business owners through the exit-planning process have an opportunity to not only deepen their relationships with these clients by providing additional services, but also to create new revenue streams and build their practices.

Education gap

Most business owners have the majority of their wealth locked in their company. But few have a clear exit plan — a way to unlock the liquidity they’ll need to fund the next chapter of their lives. Only 5.46% of business owners have a written plan for what comes next, and more than a quarter have not given any thought at all to their life after they exit the business.

Yet without sound exit planning, the future for these business owners will likely fall short of expectations. In fact, only 17% of transactional exits successfully close. Accountants can help clients improve their chances for a successful exit by getting owners to start the exit-planning process well before they plan to sell. That includes helping them define their objectives, evaluate their exit options, understand the value of their business and what it might take to increase that value, and recognize problems to be resolved. 

Helping clients transform

Exit planning is not a one-time fix, but a transformational process to both protect the value the owner has already established in the business and accelerate value-building going forward. It is a holistic value-building strategy that reflects both personal and financial goals. It also includes a prioritized action plan that provides structure and clarity around the process of building value and helps break it down into manageable pieces.

While each business is unique in its individual offerings, there are many similarities that inform the exit-planning process. For example, no matter how complex the business, it can be seen through a value lens as consisting of four types of capital: human capital, customer capital, structural capital and social capital.

These four capital types provide a reliable framework for identifying impediments to building sustainable value, then creating a plan to address them. For example, some common action items include decentralizing the owner from business operations, establishing and documenting systematic processes, bringing leadership teams together, adopting time-saving systems that drive efficiencies, building a strong, enduring culture, and creating a diverse and entangled customer base. 

Start the conversation

For exit-planning advisors, the first step is to understand the business owner’s priorities and goals. While few business owners are actively planning for their eventual exit, it’s rare to find a business owner who is 100% satisfied with the current state of their business. Most would cite at least one pain point they would like solved or an objective they would like to achieve. It could be to increase margins and profitability, to reduce the amount of risk the business faces, or to reclaim more time for their personal lives. Often, simply asking, “How do you feel about your business today?” starts a conversation that provides the information needed to determine where to begin the value-building efforts.