What to Watch Out for When Getting Outside Advice

Posted on March 27, 2026 by John F. Dini

When you bring in an outside advisor — whether it’s an accountant, attorney, consultant, or broker — you’re doing the right thing. You’re acknowledging there’s something you don’t know and going to find someone who does. That’s smart ownership.

But there’s a trap hidden in that process that most business owners never see coming.

Every Expert Has a Favorite Tool

There’s an old saying: to a hammer, everything is a nail.

Think about it this way. You go to your doctor and say, “My shoulder has been killing me — I need help.” The doctor genuinely wants to help you. But whether you walk out with a prescription, a surgery date, a chiropractic adjustment, or a set of acupuncture needles depends less on what’s actually best for your shoulder — and more on which type of doctor you happened to walk in to see.

The internist reaches for anti-inflammatories. The orthopedic surgeon schedules an operation. Each one treats your pain. Each one probably helps. But you’ll likely never realize that your treatment was shaped by who you chose to see, not by some universal best practice for shoulder injuries.

The same thing happens when business owners seek outside help.

The Advisor You Hire Shapes the Advice You Get

When it comes to something as significant as planning your exit from a business, the type of advisor you engage will heavily influence the direction you’re pointed — often without you realizing it.

Bring in an accountant and the plan will likely center on minimizing your tax burden. Hire an attorney and you’ll probably end up focused on asset protection or employment contracts. Work with a business consultant and the conversation will revolve around improving operations and boosting profitability.

None of that advice is wrong. But it may not be complete — and it may not actually align with what you’re trying to accomplish in your life.

A few years ago, a business broker added “Exit Planner” to his business card. When asked how he approached exit planning, his answer was straightforward: if an owner would agree to accept 100% seller financing, he’d help them sell. That was his tool, and he applied it to every situation.

To a hammer, everything is a nail.

What This Means for You

Before you take any advisor’s recommendation and run with it, it’s worth asking yourself: Is this the best solution for my situation — or is it the best solution this particular advisor knows how to deliver?

That’s not cynicism. Most advisors genuinely want to help. But their training, their experience, and frankly their business model all point them toward certain kinds of answers.

The best advisors — the ones worth your time and money — will ask a lot of questions before they start offering solutions. They’ll slow down, make sure they understand your real objectives, and resist the urge to jump straight to their preferred tool.

If an advisor walks into your first meeting already knowing what you need, that’s worth paying attention to. The clarity that comes from being genuinely heard saves time, prevents costly missteps, and leads to a plan you’ll actually follow through on.

The right advice starts with the right questions — not the other way around.

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The 3% Problem in Advisory Work: A Guide for Business Owners

Posted on March 6, 2026 by John F. Dini

As a business owner, you belong to a unique group that makes up only 3% of the population. Yet, many advisors treat you like any other client—using the same approaches they apply to executives, professionals, or retirees. This is a fundamental misunderstanding that can impact your business and personal goals.

Why You’re More Than Just an Asset

You are not simply a high-income individual with concentrated wealth. Your business is not just an investment; it’s an integral part of your identity, your livelihood, and your daily purpose. It is the source of your authority, reputation, and even your personal satisfaction.

Navigating Identity, Not Just Assets

When traditional clients seek advice, the focus tends to be on optimizing their assets. In contrast, advising business owners like you involves navigating a complex web of identity and emotional attachment. This distinction is crucial and affects how you engage with advisors.

Understanding the Owner’s Perspective

The Structure of Your Business

Unlike executives who operate within established frameworks, you are the architect of your business’s structure. If a senior executive makes a mistake, it usually impacts their bonus. But for you, a misstep could jeopardize payroll, credit lines, or even your family’s financial security.

This creates a protective and cautious mindset that many advisors fail to recognize. Your business is not just an income engine; it’s something you’ve built, defended, and refined over years. Every employee, system, and brand element bears your imprint.

The Impact of Structural Suggestions

When an advisor casually suggests changes, it can feel less like strategy and more like criticism. Understanding this emotional landscape is vital; without it, you may resist recommendations that could genuinely benefit your business.

The Challenge of Decision-Making

As a successful entrepreneur, you are wired for decision-making. The constant loop of “What if we tried this?” fuels your creativity and drive. However, many traditional advisory engagements can lead to implementation failures:

1. Data Analysis: The advisor reviews your business metrics.
2. Recommendations: They develop a plan based on their findings.
3. Owner Response: You agree with the plan—but then take no action.

This isn’t about disagreement; it’s about ownership. You’re more likely to implement decisions you help create. This is why coaching before advisory work is essential, especially in exit planning.

Identity: The Key Variable in Exit Planning

Advisors often zoom in on valuation, tax efficiency, and succession logistics. While these aspects are important, the critical question you must consider is:

“What will you do when you no longer own this business?”

If your answer is vague—like “I’ll figure it out later” or “I’ll travel” —then your exit plan is likely incomplete. Liquidity without purpose can lead to regrets.

The Realities of Post-Exit Life

Research shows that 75% of former business owners report dissatisfaction a year after exiting. This is rarely due to financial shortcomings; it’s often because they haven’t redefined their identity.

As a business owner, you are exiting more than just an asset—you are relinquishing your relevance. Recognizing this early in your planning can lead to far better outcomes.

Conclusion: A Call to Action for Business Owners

Navigating the complexities of your business and its impact on your identity requires a unique approach from advisors. By understanding the emotional and psychological aspects of ownership, you can foster more meaningful relationships with your advisors.

If you’re contemplating exit strategies or want to redefine your post-business identity, consider engaging with a coach or advisor who recognizes these unique dynamics. Your business is your legacy; make sure your exit plan honors that.

Posted in Entrepreneurship, Exit Options, Exit Planning, Exit Strategies, Leadership, Uncategorized | Tagged , , , , , , , , | 1 Comment

One Response to The 3% Problem in Advisory Work: A Guide for Business Owners

  1. Tom Morton says:
    March 6, 2026 at 10:50 am

    Great post, John!
    Good to see you’re still hanging in there.
    How are things, old friend?
    Tom

    Reply

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Manufacturer Stuck in the “Neutral Zone”

Posted on February 3, 2026 by John F. Dini

Here is how exit planning helped a business owner out of the Neutral Zone.

This manufacturer reached out to an exit planning consultant after receiving a book on planning as a gift from a local professional. He was in no particular hurry to leave his business. In the preceding twenty years of ownership, he had grown it from a local vendor to home builders into a nationally known specialty house.

The company provided him with a good living, generating roughly $700,000 a year in free cash flow for each of the previous five years. He wanted to continue for at least a few more years but also was concerned that he do the right things to maximize his price when the time came to move on.

What’s the Problem?

The consultant pointed out several issues that could dramatically impact his eventual transition.

First, he was handling too many duties that should be delegated. These weren’t things that required his special expertise, but rather areas where he was comfortable in just “taking care of it.” These included troubleshooting IT problems. Although the company had a full-service contract for those services with an outside vendor, he felt it was just “faster” if he first tried to fix the issue himself. Owner centricity is a major value killer in a sale.

On large orders, he prepared the price quotes personally. There were several employees in the sales department who did the majority of quotes, but after one had made an expensive error, the owner took any order over a certain dollar amount as his personal responsibility.

Stuck in NeutralThe consultant also pointed out that the business was in the “Neutral Zone” regarding profitability as the principal factor in valuation. With $700,000 in cash flow, it was too big for most entrepreneurial owner-operators to afford.

On the other hand, it was too small to attract a private equity or strategic buyer. Professional acquirers typically pay higher multiples but are seldom interested in acquisitions with less than $1,000,000 in cash flow.

Longer-Term Preparation

The owner retained the consultant as a coach to keep him on track as he addressed the issues. In the next few years, the company made a small acquisition resulting in a second location and greater production capacity. They hired a sales manager who could handle major quotes. At the exit planner’s recommendation, the owner implemented EOS with a different consultant for greater accountability in the management team.

A key employee who, like the owner, had also been a “jack of all trades” enjoyed an incentive program based solely on the company’s gross profit over a fixed level. The consultant pointed out that the improvements driving growth would very quicky make this employee wealthy without any increase in responsibilities. Fortunately, the employee resigned for personal reasons before this became an issue.

For the other employees, they installed new incentive programs based more on increasing profitability. Key employees also received stay bonuses and long-term synthetic equity incentives. This initially caused some concern, (“Are you selling the business?”) but that quickly died down when it became plain that no changes were imminent.

Breaking Out of the Neutral Zone

The next five years brought ups and downs. COVID first reduced sales, then created a surge that couldn’t be duplicated. Eventually the company settled into a sustainable growth pattern, reaching well over $1,000,000 in EBITDA. Of course, there were multiple inquiries about selling during this period,. However, the owner felt none of them satisfied his goals for a rewarding life after the business.

His efforts to change the value of his business were driven by the clear personal objectives  developed with the planner, rather than just a pursuit of growth for growth’s sake. Eventually he agreed to sell the business to a strategic acquirer for roughly twice the value of an appraisal that was done at the beginning of the process.

None of the changes made were earth-shaking. Having a goal, the means to track it and a framework for moving towards it translated into millions of additional dollars in the owner’s pocket. He was comfortable with a transaction that also preserved his legacy and his employees’ futures.

Is your client ready for a transition? Have them take our 15 minute assessment.

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NQDCs – Funding and Forfeiture

Posted on January 30, 2026 by John F. Dini

In our last article, we discussed Non-Qualified Deferred Compensation (NQDC) plans as a tool to compensate key employees for achieving long-term goals. One component of such plans is the fact that they are frequently unfunded and legally considered an unsecured promise to pay.

Nonetheless, both plan sponsors and recipients often want a funding mechanism to set aside assets, manage cash flow, or hedge the liability. In addition, employers typically want conditions under which they can rescind the plan for cause, including failure to achieve the objectives the plan was designed to incentivize.

Funding Mechanisms

For cash-based plans, there are four common ways to fund the plans.

  • Pay as you go. Goal-based success is paid in cash as a bonus. This has the advantage of immediate expensing against profits. Amounts can still be based on progress toward longer-term goals, but there is little accumulation of a larger benefit toward a significant future payout.

  • Reserve accumulation. The company sets aside funds equivalent to the amount earned toward an eventual payout. This appears as an asset on the balance sheet and has no tax deductibility until paid. Although it may give the employee some mental assurance, this asset can still be attached by creditors and has no legal segregation from the company’s other holdings.

  • Rabbi Trust. This is an irrevocable trust specifically formed for the accumulation of NQDC benefits. The company cannot use the funds for another purpose, so the employee has an added level of confidence in the availability of future payment. However, the assets are not secured from creditors, and unwinding the trust in the event of the employee’s termination can be problematic.

  • Company Owned Life Insurance (COLI). The accumulated benefit provides tax-deferred growth, liquidity via cash values, and reimbursement via death benefits. The asset helps to offset the accumulating liability of the NQDC on the balance sheet. The plan may define a transfer of beneficiary upon qualification or pay out the bonus in cash and keep the policy in force for a future payout.

Vesting and Forfeiture

Vesting in a plan can be structured in various ways.The most common method is based on tenure: there is an ultimate goal, and the beneficiary is entitled to a percentage of the reward each year until the full value is reached.

It may be 10% vested each year for ten years, or vesting may follow an increasing scale (e.g., 5% in the first year, 10% in the second, 15% in the third). Some plans include “cliff vesting”: the employee has no claim on the award until, and unless, the full vesting period is completed. Vesting can also be tied to the percentage of goals met each year.

Of course, “the best-laid plans of mice and men often go awry.” Sometimes the employee doesn’t work out. Life events may intervene, and the employee may terminate voluntarily—or performance may falter and they are no longer a candidate for continued participation.

That is why the legal documentation of any NQDC is critical. Most agreements read much like a buy-sell contract among shareholders. The employer and the employee are making long-term commitments to each other, and their terms of separation are best addressed at the outset.

Note: This article and the previous one on plan structuring are intended as an overview for advisors to business owners. Non-Qualified Deferred Compensation is complex and should be designed with the guidance of legal and tax advisors.

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NQDCs – “Let Me Count the Ways”

Posted on January 15, 2026 by John F. Dini

Non-Qualified Deferred Compensation (NQDC) plans are a powerful tool for incentivizing and retaining key employees. They offer virtually unlimited flexibility in methodologies, objectives and rewards to suit a company’s strategies and goals.

What is “unqualified?”

Retirement couple budget, finance and investment planning, loan and paper bills for online banking at home. Senior man, woman and people reading tax money report, cash savings and admin document note.Quite simply, NQDCs are discriminatory. Some owners shy away from that term, but discrimination isn’t automatically illegal. Illegal discrimination in the workplace is when an employer or manager treats an employee unfairly due to their race, color, religion, sex, national origin, age (40 or older), disability, or genetic information. 

Non-qualified plans discriminate because they aren’t offered to everyone. The Employee Retirement Income Security Act (ERISA) sets standards for employee benefits. Retirement and health plans must be offered equally to all employees. It does not apply to incentive compensation. As long as the requirements for participation don’t include one of the factors in the paragraph above, it is perfectly legal to discriminate between employees.

There’s a catch, of course. ERISA also allows employers to set aside benefit costs as a pre-tax expense, thus reducing taxable profits. NQDCs have no such advantage. They can be expensed when paid, but the accrual of benefits earned under that plan is a liability rather than an expense.

Therefore, employees should be informed that these plans are unfunded. They are dependent on the company’s ability to pay them when they are due. We will discuss funding and payment in the next article.

What should be incentivized?

The term “deferred” indicates that NQDCs should be used to recognized performance over a period of time. Typical targets include growth in company value, improvements in cash flow or profitability, revenue growth, employee turnover, brand reputation, acquisitions, customer satisfaction and geographic expansion.

Goals can be mixed, prioritized or laddered. For example, vesting may be tied to the employee’s tenure, plus payout levels tied to profitability. Bonuses can accrue based on growth in revenue or profits, with the percentage of payout linked to new products or territorial initiatives.

Half of the awards may be tied to company goals, with the other half linked to individual or departmental objectives. A percentage of any award may be tied to EBITDA, with another percentage dependent on safety benchmarks and another tranche to leadership development.

NQDCs often include virtual equity measures, such as Stock Appreciation Rights (based on a percentage of the growth in value of the business) stock options or phantom stock.

In all cases the recipients of any awards should have a scorecard that plainly outlines their qualifying metrics and time frames.

Who should receive NQDCs?

The complexity of variables indicates that recipients should have several qualifications. First, they must be in a position to affect the outcomes desired. Their decisions should have a direct impact on the incentive calculation.

Second, they need day-to-day visibility into the components that make up the goals. Handing them numbers at the end of the month has little effect if the recipient doesn’t know which levers to pull to make those numbers happen.

Finally, the employees who receive NQDCs should be “keepers.” These plans are not suited for remedial behavioral modification. They are to reward those who are critical to the organization’s success. Ideally, the company wants them to continue performing their duties at a high level for the rest of their career.

Note: This article and the following one (on vesting and funding) are intended as an overview for advisors to business owners. Non-Qualified Deferred Compensation is complex and should be designed with the help of legal and tax advisors.

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