Business owners are often faced with the client concern, “What will happen to my account if you are no longer with the company?” It is a valid question and one that every business owner should spend some time reflecting on. Creating a succession plan for your business isn’t just a smart decision, it should be a non-negotiable for anyone with employees. Even if you do not currently have employees, having an emergency plan in place can be a source of relief for clients.
Succession Planning For Sole Practitioners
If you are a sole practitioner, it may be hard for you to create a proper succession plan, but that does not mean you cannot set up a disaster plan. Create partnerships with other firms (two to three is advisable) and create an agreement that in the event of a disaster, they are prepared to support your clients. They in turn would create the same agreement with you. At my firm, we also made arrangements that would allow Tobias to work from partner firms’ offices in the event that ours were out of commission. You should also consider creating a back up of company and client files.
Succession Plan For Employees
If you have employees, now is the time to start thinking about a true succession plan for your business. The reality is, there will come a time when you cannot serve your clients anymore, but your clients will still need your service. What will happen to those existing clients and your business when it’s time for you to step away? Creating a succession plan means finding those key individuals that can eventually take over the business in the future, and continue the good work you’ve started. When you begin creating a succession plan, it is easiest to find the right people from the start. Find team members who could grow into leadership roles and that shared your values.
Identify Key Roles And Key Individuals
The first step in succession planning is to identify the key roles you will need to fill in the event of someone leaving the company, or a loss. Ask yourself:
1. What positions require special skills and training that we will need to start developing now, before the position is open?
2. What are the roles that absolutely must be filled in order to keep the company running?
These are the roles you will want to focus on as you build your succession plan.
The next step in succession planning is to find those individuals who will become your next top-level players. For starters, try to look internally at those who are already committed to the company. Assess current employees’ viability for moving up the ranks. Nurturing the skills and talents already found within your current staff ensures that a talented and loyal person will fill the role. It is also a good idea to create a plan for how you will hire outside employees should that need arise.
Once you’ve identified those key individuals you want to include in your succession plan, it’s a good idea to assess their skills and help them to improve by offering trainings. Be open with your current staff about the succession plan. Those that are talented and love what they do will want the opportunity to become partners. Let your staff know there is room to grow and that you look to current staff first to fill those positions.
Sharing A Vision
When choosing successors, it’s not enough to just find individuals with the skill set needed to do the job; they also need to share your philosophies and your vision for the company. They need to adhere to your same moral code. While having new ideas and perspectives is a great thing, it is important to find someone who has a similar outlook and vision for the company. Having that connection will mean a much smoother transition and less risk of losing clients once the transition happens.
The company culture is a very important aspect of your brand’s identity. You want to be sure that when you leave, the people who were attracted to your brand, as either employees or clients, will remain loyal after the transition happens. Be transparent with current employees about your vision for the future for the business and find those who share your passion.
When Plans Change
While creating a succession plan is a very important step, it is equally important to recognize that while your plan may be solid right now, there could be need for changes as time goes on. Create a strong plan, but build some flexibility into it as well so that you can stay nimble if required. Perhaps your industry is changing and you need to prepare your staff with additional certifications or trainings. Perhaps you need to consider growing your staff larger than you originally anticipated. Being willing and able to pivot as needed will go a long way in keeping your company viable for the future. While circumstances or tools may change, one thing that should remain constant is your company’s overall position and values.
Don’t Rush It
As you get closer to retirement or to that next move, it’s important that you take the time to create an exit strategy, and that you do so well in advance of stepping away. Start working with your successor early on to ensure a smooth transition—before you’re ready to leave. It is also a good idea to introduce your successor to clients well before he or she takes the reins. Being transparent about the future is important for the overall health of your firm.
As you plan ahead for the future, whether you are a sole practitioner or have a team of employees at your side, the most important aspect of your succession plan is that you explore all the options available. Don’t be afraid to look into creating a plan for the future. Planning ahead is one of the greatest ways to ensure your company’s success in the future.
Benjamin A. Tobias, CFP, CPA/PFS, CIMA, AIF, is the founder and president of Tobias Financial Advisors. Tobias has been recognized by numerous publications over the years, including Worth magazine as one of the “Top Wealth Advisors” for multiple years.