Helping Clients with Succession Planning
How are you helping clients with succession planning? Unfortunately, it is estimated 50% of small businesses don’t have a succession plan. That’s bad news for business owners who want their operations to continue after they exit the company. The good news is that it’s never too early or too late to talk to clients about the importance of having a succession plan. And one way to add value for your clients is to help them with the planning process.
How to Help Clients with Succession Planning
Talk About the Future Today
It’s never too early to start succession planning. The process begins with determining what your client wants for their future.
Do they want to:
- Sell their business?
- Merge with another business?
- Pass the business to a family member or employee?
- Turn out the lights and walk away (probably not the best option).
Get the conversation started by asking your client what they envision for their business far in the future. They may not have given it much thought until now. Therefore it’s an excellent time for them to consider the future of their business seriously.
Get Input from All Business Partners or Owners
- What’s their ideal situation?
- How should things be handled if the worst-case scenario happens?
- Which steps can be taken today to prepare for such an event? Creating detailed processes for the business’s operations may make it easier for someone to step into the person’s shoes if necessary.
- Who can fill the person’s role if they can no longer work?
- Will someone need to be trained to fill the role?
- Are there gaps that need to be filled? As a result, what can be done to fill them?
Create a Plan
Creating a succession plan is a multi-step process that involves multiple parties. Having an emergency plan is a great start. Life is unpredictable, and a key person may suddenly have to leave their position.
Now that you have this worst-case scenario plan, you can focus on what happens in a planned retirement or exit situation.
If your client’s ideal situation is to pass the business on to an employee or a family member, the planning process may involve the following:
Pinpointing the Best Succession Candidates
Selecting the right people to step into your client’s shoes is essential. The right talent will make the transition as smooth as possible for everyone involved,
If your client had to hire for their position internally, who would be the best candidates for the job? Will these candidates need training, or can they simply step into the role?
The next person in line may seem like an obvious choice to fill the role. But clients should also consider other candidates who show great potential. For example, another team member may have the skills and drive to fill the role.
Discuss Succession with Potential Candidates
Identifying potential candidates to fill the role is only one piece of the puzzle. A team member may be perfect for the job, but what if they’re not interested in the role?
Speaking privately with these potential candidates about their vision for their future and potentially filling your client’s role is essential. Make it clear that they aren’t guaranteed this role but that they are being considered at this moment in time.
Invest in Training and Development Now
Once willing candidates have been identified and notified, you can accelerate training and development to prepare these individuals for the role.
- Include candidates in high-level management and strategic planning meetings to expose them to critical aspects of this role.
- Mentors can help candidates develop essential leadership skills, including communication, empathy, and interpersonal skills.
- Job rotation can help candidates understand the responsibilities and challenges of different roles.
- Give candidates a trial run in the position. A trial run will give them valuable experience and knowledge while helping gauge whether they would excel in the role.
- Training and education can help candidates develop critical technical skills they will need.
Preparing candidates for the role now will make it easier for them to step into it, whether it’s an emergency or planned exit. Also, consider any talent gaps these candidates may leave behind if they exit the company. These talent gaps should be the focus of future recruiting to ensure that the company doesn’t lose these valuable skills.
Consider Life After Business
Succession planning doesn’t end with the plan itself. Clients should consider life after their business. They may dream of traveling the world in retirement, but eventually, they’ll need to return home. Then what? They will need a reason to get up every morning and a purpose.
Every business should have a succession plan, and you can leverage your expertise to help them with this critical process. So how are you helping clients with succession planning?Use these tips to help your clients plan for the future of their businesses today
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Ideas for this article came from Christopher Hayden, CPA, CMA, CGMA, who is the managing partner of Hayden Nelson & Yoder, a CPA firm based in Pennsylvania. You can learn more about him or the firm on their website https://hnycpas.com/.
