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3 Questions You Should Consider for Your Succession Plan

Succession-planThe AICPA’s Private Company Practice Section recently released results of its 2013 CPA Firm Top Issues Survey and succession planning is among the top 5 concerns for firms with 11 or more professionals. It’s no surprise to me. In fact, I’m elated firms have succession on their minds. My only surprise is that succession planning wasn’t cited as a top concern for all survey respondents.

Succession planning is an issue many CPAs have been avoiding for the last decade or so. Like many of our clients who may be uncomfortable discussing planning finances for a family that will continue to exist without them, we CPAs are in a tad bit of denial about our own mortality. We may not even realize the opportunity we have to establish a legacy and mentor others as we plan for the future of our firms.

Even those managing partners who have laid out the firm’s succession plan may not have asked themselves all the right questions to help them create the most stable plan. Today, I challenge you to consider the following three questions:
  1. When are you planning to slow down? Most people don’t work full time then completely retire, most gradually reduce their time commitment to their firm. Therefore, you should start to consider when you plan to slow down--not retire. Are you looking three years into the future? Five years? While you may be communicating with your client base more than ever through phone and email conversations, you’re likely seeing them in person less and less; most likely only once a year. Slowing down five years from now sounds like an eternity, but it is only five visits. Three years is three visits!
  2. Are your clients brand or partner loyal? Do your clients come to your firm because of the firm, or because they have a connection with a specific partner? Brand loyal clients take far less time (perhaps only a few years) to transition. But if your clients are partner loyal, you need an extended time frame to conduct a proper transition, allowing a succeeding partner to develop a relationship with the client.
  3. What is the secret to client and staff retention? In any successful merger, acquisition or succession plan, client and staff retention is critical. While there are many aspects to this, the main one is continuity. If everyone, client or senior manager, perceives the merger as the loss of something as opposed to the gain of a new firm, the path is already treacherous.

There are many components to succession planning, so it’s vital that you and your partners start the conversation now. If you have a plan in place already, take some time to revisit it to make sure your success factors are still at play.

Whether you have a plan or not, the AICPA’s PCPS team has some valuable solutions to help you start a plan, or refresh an existing one. Check out the Succession Planning Resource Center. Whether you’re a sole practitioner or a stakeholder in a multi-owner firm, you’ll find free commentary on the results of the 2012 PCPS Succession Planning Survey, so you can benchmark your progress against that of your peers.

If you really want to dig into succession planning, I encourage you to consider the AICPA’s Succession Planning Summit, which will be held October 28 to 31 in New York City and Durham, North Carolina. Succession planning experts August J. Aquila, PhD, Bill Reeb, CPA, CITP, CGMA and I will lead separate sessions for small firms and sole practitioners, medium and large firms. We will help participants create a succession plan and then begin implementing it with helpful, after-session interactive webcasts throughout the year.

Joel Sinkin, President, Transition Advisors, LLC. Joel exclusively consults CPA practitioners on ownership transition. 

Succession plan image via Shutterstock


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