Here are a few questions you should ask yourself to get started.
1. Have I taken my own advice?
As an accountant, your primary function is to work with your clients to help manage their business finances. As a trusted business partner, that means advising on many aspects of small business operations, including succession planning.
Unfortunately, many accountants never take a step back and consider succession planning advice for themselves. Failing to do so is an amateur mistake.
As you would advise your clients, ask yourself where you want your business to go. Is your intention to sell? Grow the firm with additional partners? The answer to these questions will help you align your business processes and infrastructure with intended succession planning goals.
For many accountants, the biggest source of misalignment involves how partners are compensated. The traditional partner compensation model is tied to individual books of business. Under this framework, if an individual partner's book of business slips, it becomes increasingly difficult for them to retire.
Innovative firms understand that in order to drive succession planning, they have to find a way to treat clients as shared entities. Moving to a partner evaluation and compensation model that rewards partners for referrals into other service lines rather than solely on their book of business, for example, can help move the needle.
2. Have I identified the right successor?
Ironically, when thinking about potential successors, the first thing partners should do is look to their clients, not to their employees.
Think about your existing client base and what your client base will look like in 10 years. Ask yourself if the person you have in mind is a fit for the latter. Do they have the right skill sets? Are they aware of new trends in the accounting industry and, more importantly, are they interested in those trends?
If you answer yes to the above questions...you're still not done. You next need to consider whether your potential successor has the right mindset. Imagine a spectrum ranging from tactician to strategist. While you can have a successful career as a tactician, your successor should weigh heavily toward strategy. A practice needs a visionary leader to balance against the people who execute.
3. Have I shared my thoughts with those that matter most?
It sounds obvious, but many partners make the same big mistake when it comes to succession planning and retirement: not sharing their vision with their intended successor. Imagine what would happen if you pinned your retirement dreams to one person, only to find out too late that your chosen successor isn't interested.
Transparency is key throughout this whole process. Once you've identified a potential successor, ask if they are interested. If they agree, begin to plan for the future together. While the process will likely begin as a mentor-mentee relationship, over time, it should grow toward an equal partnership. In other words, you'll need to begin loosening the reins, as difficult as that can be. Bringing them into the process so that they are primed and ready for ownership will make the eventual transition easier for everyone.
4. Have I emotionally prepared myself?
Letting go is never easy. When the time does come to say goodbye, it's important that partners be able to walk away. This is particularly true for family owned and operated practices where the successor could be a son or daughter.
To ease the process for family partners, discuss a transition plan in advance and stick with it. Gradually stepping back will be easier than abruptly cutting the cord. Most importantly, once you're done, stay done. As tempting as it can be, perpetually "checking in" will do more harm than good.
Take a step back to move a foot forward
While retirement might be down the road for many, it is never too early to start thinking about your succession planning next steps. It can be an overwhelming process, so thinking through the above four questions can help make the process more manageable. Baby steps today will ultimately help drive big changes tomorrow.
