Most owners buy annual tax and assurance services from their accountant easily enough, but when it comes to investing in business advice, owners can be hesitant. Entrepreneurs reckon they know their business better than anyone and many take the attitude “If it ain’t broke, why fix it?”
For an accountant keen to expand her practice beyond filing tax returns, fighting this inertia can be frustrating, which is why re-positioning your business advice as exit-planning counsel can open a new, often hidden wallet of money to spend on professional services.
The Hidden Wallet
The Hidden Wallet is best explained using an analogy from our personal lives. Think back to the last time you sold a home. My guess is, you did your best to make the home show well and in so doing, spent some money on professional help. You may have called a plumber in to fix the leaky faucet in the bathroom, hired a painter to freshen up the walls, or brought in a gardener to tart up the backyard.
You may have been perfectly happy to live with a leaky faucet, scuffed walls and an overgrown backyard for years; but when you decided to sell, you invested in your home because you knew you would get a handsome return on every dollar spent on services.
The same phenomenon can be seen in the business market, where owners spend years running a company with duct tape wrapped around some of their thorniest problems. They are inert; hesitant to spend on business advice when good enough is good enough. But when they make the decision to sell, they open their hidden wallet – full of money to spend on services they know will deliver a return on their investment many times over.
Here are five services to offer business owners who are fixing up their business in advance of a sale:
1. An Audit: Business buyers like to see that a business has invested in a professional set of books. Owners may have balked at the cost of an audit before, but in the face of selling soon, they’ll invest the extra money in a rigorous set of books.
2. A Valuation: Owners planning to sell want to know what their business is worth. Having a formal valuation done can help owners go into a negotiation informed.
3. A Growth Plan: For a lot of owners, their business plan is in their head. That won’t cut it for a buyer who will want to see the owner’s projections for the future. The process of working with you on a plan will help them run their business in the short term and be essential when they get an expression of interest from a buyer.
4. A Tax Plan: When an owner sells, the most important number is what is left in their jeans after tax. By structuring a tax plan in advance of a sale, the owner can get a return on your tax structuring fees many times over.
5. A Wealth Plan: Owners who sell need advice on managing the proceeds of a sale. If you don’t have a wealth planning offering, consider starting one.
It may not be obvious, but all business owners have The Hidden Wallet and with seven in 10 owners in the United States planning to exit in the next 10 years, the time is now for you to benefit. To crack The Hidden Wallet, show owners how every dollar spent on advice from your firm will pay off many times over when it is time to sell.
John Warrillow is the founder of The Sellability Score, a tool used by accountants to start the succession planning conversation with their clients. He is also the author of “Built to Sell: Creating a Business That Can Thrive Without You.”