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Succession Planning: The Talk You Need to Have

Succession-planStrong planning skills are a must for anyone who wants to be at the top of their field. CPAs have these skills in spades. Our fingerprints can be found on the successful business plans of companies throughout the country—from the mom and pop store down the street, to the Fortune 500 company with thousands of employees, and everything in between. Helping organizations chart their long-term future makes us indispensable threads in the fabric of the U.S. economy.

Why, then, do so many of us not engage in planning for the long-term future of our own firms?

According to the 2013 Private Companies Practice Section CPA Firm Top Issues Survey, succession planning is among the top five concerns for four out of five firm sizes. The 2012 PCPS Succession Survey, however, shows that only 46% of multi-owner firms have a written succession plan in place. A mere 6% of sole practitioners have a Practice Continuation Agreement with another firm. 

These numbers are concerning, and the consequences are real. As CPAs, we know it’s easier (and wiser) to plan for tomorrow before tomorrow comes. In the absence of a formal succession plan, your firm’s transition could lead to confusion and oversights, resulting in the loss of time, money and clients. Firms, and especially their clients, need new leaders and a clear plan to ensure uninterrupted delivery of critical services.

Fortunately, it’s not too late. Consider these three aspects of succession planning, and help ensure your firm’s longevity:  

Recruit and retain quality staff

For many firms, tomorrow is coming faster than anticipated. The Succession Survey reveals that 63% of firms expect to have succession planning challenges in the next five years. With 10,000 Baby Boomers retiring every day, our profession is in the midst of an unprecedented changing of the guard. Firms must be proactive in identifying top talent to replace the veteran CPAs leaving the profession. It also pays to have a contingency plan. Succession planning is much easier when you have a pool of quality successors from which to choose. Develop a Plan B as well as a Plan C in case turnover claims one or more of your candidates. 

Leadership training and development

Emerging partners and promising talent need training to hone the entrepreneurial spirit and communications and mentoring skills that are necessary to lead a firm. Some partners who plan to sell their firms choose not to invest in training, perhaps believing that they would be paying for skills whose value will ultimately be realized under a different partner’s watch. Consider, however, that anyone interested in purchasing your firm is going to evaluate the quality of your staff. If your firm is short on people who are ready to lead, don’t be surprised if you get a low offer or no offer at all.

Fortunately, there are plenty of opportunities to gain leadership exposure. The AICPA’s Emerging Partner Training Forum is a two-day hands-on conference that will help young leaders develop their planning and leadership skills, while preparing them to assume new responsibilities. At my firm, we send staff to the E.D.G.E. Conference and Leadership Academy, and also offer internal skills training. Many state CPA societies offer their own leadership training programs as well.

Long-term strategic planning

The PCPS Succession Planning Resource Center helped my firm chart a tactical course that works for us. Ultimately, we saw improvement when we combined programs and tools with a strategic focus on leadership training. We incorporated this training into our culture by setting an expectation that leaders will mentor and develop other leaders. But first we had to acknowledge the importance of – and need for – a plan, particularly in light of today’s complex and uncertain environment. I’ve never regretted that decision.

As CPAs, we all want to do the right thing for our clients, for our businesses and for ourselves. The effort you put into developing a succession plan will more than make up for itself when it comes time to hand over the reins. You’ve spent your career building and shaping your legacy. Isn’t that worth protecting by empowering the people who can carry it forward?

William E. Balhoff, CPA, CGMA, CFF, Chairman of the Board of Directors, American Institute of CPAs.


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