Succession Planning for You and Your Practice

ChangeGPS // Estate Planning

Having a succession plan shows your employees and clients that you have their best interests at heart as it demonstrates you’ve planned for that time when you will no longer be there. But while many accountants have worked all their lives to build wealth and financial security for their clients, they’ve neglected to map out the same long-term strategy for themselves.

Perhaps you think you’ll deal with the subject of succession when you’re closer to retirement. But what’s the plan if you become physically or mentally incapacitated, or even die? Having long-term succession planning options in place protects your clients’ interests and your practice from permanent closure or a reduction in its value.

Building a leadership team

If something unfortunate happens to you – such as an accident that has left you incapacitated – you need to have someone within your practice who can immediately step in to make decisions on your behalf. Even if your practice is small, you still need someone that can act in your place if required. This involves building up a business leadership team.

Building a leadership team can start simply through giving certain people within the business the authority to make occasional technical and operational decisions. An example of a technical decision could be giving staff permission to sign-off on certain levels of authority. Say, you have a client who has an extremely well automated, highly digital bookkeeping system with financial controls built in. After you review it, you could then allow a more junior employee to make the technical decision to sign off on it. This gradually builds their leadership skill-set.

An operational or “running the business” decision could be as simple as asking an employee to consider “how much are we going to invoice for a particular hourly rate project?” Asking staff for their input in these types of decisions starts giving them a say in your practice’s revenue generation.

Setting up for succession

The best succession plans tend to involve employees who have come up from within your practice. These employees already know the clients as well as how the business works and this makes for a smoother transition. However, it’s important to help staff learn to make judgement calls and this involves building up their experience slowly and over time. While you may feel comfortable talking to a client about value, or about a tricky situation that's developed and needs to be fixed, a more junior employee may be scared of making the wrong decision, because they think their employment might be at risk. It can be a five to 10-year process to train staff to become leaders so the earlier you start the better.

While a business leader may only be required to cover you for a short period of time, a successor director is needed permanently. It’s crucial to have upgraded your company constitutions to allow for successor director resolutions, and have signed those resolutions forms. If you haven’t done this, and unfortunately die, then you can't do anything. If you're a sole director with employees, it’s important you have sorted out your succession plan so someone can immediately start running the business.

Finally, make sure you have an effective communications plan around succession that will be rolled out to clients in the event you are no longer there or are temporarily incapacitated. Your clients are much more likely to remain loyal if they are kept in the loop.

For a comprehensive directory on how to build the soft skills of your accounting team, with tips and exercises, download this free guide.


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