You’ve invested a huge amount of time, energy and capital into building a successful and profitable accounting practice. But when the time comes for you to exit the business, will the right person be ready to take over?
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Succession is a natural part of the business life cycle. So unless you intend to sell or wind up your business or merge with another firm when you eventually exit, you need to have a strong succession plan in place — and that means creating your own ‘mini me’.
According to financial adviser Nathan Moss, Associate Director of The MBA Partnership Pty Ltd, it’s never too early to start developing the leadership skills of your team.
“I’ve always believed that a business has to be bigger than any one person,” Moss said. “I don’t just have one mini me, but several — I know there’s always someone in the firm who could take on my position tomorrow if needed.”
So how can you make sure your mini me will be ready when the time comes? Here are 5 tips to help you plan your succession effectively.
1. Start planning early
For many business leaders, succession management doesn’t become a key focus until the final years before they retire. But Moss believes it’s a long-term exercise that should be started much sooner.
“In reality, it takes about 10 years to implement the changes needed for a successful handover,” he explained.
Begin by including succession management as part of your overall business plan. Consider your long-term goals — where you’d like to position your firm in the market, and how much you expect it to be worth when you exit. Once you know what kind of business you’d like to leave behind, you’ll be in a better position to choose the right person (or people) to run it.
2. Attract the best and brightest
Whenever you’re recruiting new staff, it’s worth considering each candidate’s leadership potential. The MBA Partnership has consciously invested in developing its leadership team by handpicking staff with a positive attitude and a desire to excel. As team members move through the MBA ranks, they receive the support and mentoring they need to develop their own skills and eventually become mentors themselves.
Moss commented: “We have eight team leaders, who have all worked their way up through the business to become the kind of leaders junior staff want to be like. Everyone at The MBA Partnership shares a passion for what we do — that passion starts at the top and works right through to the front door.”
3. Share the wealth
Succession planning is one thing, but for your plan to succeed your mini me needs to share your vision for the firm’s future. One way to ensure their commitment is to offer a financial stake in the business. If your successor gets a direct benefit from your profits, you can be sure they’ll do their best to make those profits grow.
“At The MBA Partnership, our team leaders own 40% of the business — whether it’s 1% or 10% individually,” Moss said. “Having team leaders as shareholders is one of the aspects that makes our practice so strong.”
4. Invest in training
To manage succession smoothly, it’s vital that your team get the ongoing training and development they need to learn the business inside out.
“The budget we allow for our training programs would probably dwarf that of similarly sized firms,” said Moss. “But we feel it’s essential for developing a strong management capability.”
One of The MBA Partnership’s initiatives is to hold weekly roundtable discussions on management skills and techniques, and how they can best be applied across the business.
“We focus a lot on giving feedback to help our team develop and grow,” Moss added. “For feedback to be the most effective, you need to provide it in a timely manner, not three or six months down the track at performance review time.”
5. Strengthen your business
In a landscape that’s rapidly evolving, it’s not just your mini me who needs to be ready for the future — your business needs to be prepared too. For your firm to stay viable, you need to keep up with technological and regulatory changes, while also developing your service offering as client needs shift.
Moss commented: “If your clients aren’t engaged and you’re just receiving remuneration off an old book of business, your firm is probably lagging behind the times,” Moss says. “To stay competitive, you need to keep up with changing client needs and adapt to meet those needs.”
That’s why it’s so important to start the succession planning process early. By knowing where your business is heading, you’ll understand the kind of leadership it will need when you’re no longer at the helm.
In Succession planning part 2, we’ll explore the importance of team culture in succession planning.