Put simply, succession planning can be defined as a process whereby the ownership of your firm is transferred to another person or practice. This often occurs when the owner or founder of the firm has an inability to continue to provide services due to unforeseen circumstances, or perhaps makes a decision to retire.
Speaking of which, a 2014 study discovered that approximately 32% of financial advisers are likely to retire within the next decade. While this may seem a long way off, retirement is something that can creep up on you before you know it. For that reason, it’s incredibly important to develop a roadmap in order to secure the future of your firm.
As the accountancy firm owner, you will have the deepest understanding of the principles and values which have been instilled within your organization. With that in mind, taking the time and energy to create a solid foundation for what to do next will ensure that your business stands in good stead once you reach your retirement.
Meeting with partners
Setting up a meeting is an important part of the succession planning process, as it provides partners with the perfect opportunity to share their innermost thoughts and ideas regarding the future of your business. Whether it’s determining an appropriate exit strategy, deciding how and when to transition clients, or otherwise, there are many important aspects that can be discussed in detail during a meeting.
The welcoming of new ideas
When it comes to liaising with potential successors for your firm, one of the greatest benefits is that a new perspective can be brought to the table. With a fresh set of eyes taking a look at how your business operates, you may find that creative changes and developments can be identified and implemented over time.
In the process, you can allow your successor to take charge in certain areas of the business, giving you the perfect opportunity to assess their performance as they take the steps to shape your firm’s future.
Potential adoption of a large-firm mindset for smaller firms
For firms both large and small, succession planning is a major consideration. For small firms in particular, succession planning can be classed as even more vital, as there is limited bandwidth alongside specialized roles of their principles. Therefore, it’s clear that smaller firms need to have a plan in place to ensure that future staffing needs can be fulfilled and will mean that the ability for leaders to retire won’t be affected.
All in all, a succession plan often ensures maximum longevity and stability within a business where potential clients and employees are concerned. So, if you’re looking to set your business apart from your competitors, it’s well worth considering traditional gaps accounting firms experience and ensuring that succession planning best practices are adhered to. Taking this into account will also ensure the future of your firm regardless of the events that are occurring in labour markets.
Training a larger candidate pool
While maintaining a list of employees with high-potential to fill any future vacancies is important, it’s also imperative for your approach to succession planning to consider the experiences and skills required for senior management positions. At the same time, it should provide employees with the opportunity to develop necessary leadership skills through an appropriate educational system.
As an example, it could be hugely beneficial to provide training for potential successors in terms of general information and client history, alongside the unique needs and characteristics of clients. In any instance where a new service has been established, it will also be wise to provide eligible successors with the opportunity to experience working in that particular area of the business.
Through offering cross-rotational experiences, special assignments, and appropriate training, a larger pool of successors can be achieved by accounting firms. Although, just keep in mind that training viable successors often takes a number of years. Therefore, it may be worthwhile integrating training when hiring. In doing so, this will enable you to create a more natural progression of future leaders, and gain a deeper understanding of your firm’s bench strengths along the way.
Putting plans in writing
A crucial aspect of effective succession planning is to have any plans in writing. In doing so, this will ensure that your firm stands a better chance of performing just as well, even after you have retired, with any dreams more likely to become a reality.