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Succession Planning

Business owners face a lot of responsibility when they are deciding on the future of their business once they retire or can no longer run the business. There are several important factors surrounding family and legal matters that business owners must hone in on to ensure that their business will survive after they are gone. Understanding and considering all the options is a very important step for business owners to take when it comes to their firm’s future. In this piece, we will take a closer look at the options business owners have.

What is Succession Planning?

Succession Planning is the process of an owner transitioning his or her ownership position to another person or business. This typically occurs when a business owner is planning on retiring, moving on, or when they are no longer capable of running their business anymore due to unforeseen circumstances.

Role of Current Owner

The current business owner is certainly the one who knows most about their firm, such as its principles, culture, values, and more, which is why it is vital to put in the required time and effort when finding a successor for their firm. This will ensure that the firm’s core values and principles are translated over and carried out by new ownership, creating stability for the future.

Succession Strategies

Depending on what the owner has in mind, there are several ways a business can be translated into new ownership. Let’s take a look at some of the different strategies below:

Happy Woman Plotting

Training a Future Owner

One of the most common and effective strategies business owners implement is hiring and training someone to become the successor of their business. This requires a lot of time and commitment from both the firm’s owner and successor. The new leader will become the most prepared if they are trained hands-on by the person who is leaving them the business. If you are a business owner looking to leave their business to a new successor, plan accordingly.

Find a Timeframe

Take into consideration whether or not the candidate selected will be ready to run the business in the desired time frame. Creating a list of objectives for the candidate to complete in a set period will help the business owner see the work of his candidate. Setting realistic time frames will also help the successor master each skill that is needed to effectively run the business.

Setting Goals for the Successor

Break down the responsibilities of the successor into smaller and more manageable tasks. Setting milestones that are well thought out and measurable will ensure the successor will become a more effective manager and evolve into the leader the firm needs over time.


Encourage your successor to observe you regularly, so that they will gain a deeper knowledge of the roles and obligations of the job they will soon be taking over. Schedule reoccurring meetings to check up on your successor. Discussing what they have learned and areas they need improvement in will assure they are working on the areas that need to be addressed.

Keep an Open Mind

One of the upsides of training a successor to take over your company is the new ideas that will be introduced from an alternate perspective. Having a new person look at the industry and business can allow for creative suggestions and developments to be made. This also allows the owner of the firm to get insight into how the successor plans on running things in the future.

On the other hand, training a successor to fully take over your business will require a lot of time to be put in by both parties, and isn’t something that can be done overnight. Those looking for a quicker solution should continue reading to find out some other, much quicker ways of transitioning the business to someone else.

Practice Continuation Agreement

Shaking hands in agreement

If the business owner does not plan on leaving their business to a successor, or they have not found the right person for the job, a Practice Continuation Agreement (PCA) may be an effective strategy.

What is a PCA

A Practice Continuation Agreement is a policy that will act as protection for the firm. In case of a tragic event that causes death or any physical or mental disability, another firm will manage the organization and serve its clients under the PCA agreement. On top of this, it can be a very effective vehicle to be used for retirement. Although these deals take time to work out the conditions, they can be very effective for business owners that do not want to train a successor.

Choosing the Right Company

A tip for choosing the right company is you want to choose a firm that can serve your clients, without issues, during a transition in management. This process is typically started by creating a list of firms or people you believe to be eligible to manage in your absence. Take into consideration the clients you serve, the location of your firm, the rates that firms on your list charge for services, and contingencies of contracts when deciding the capable firm or person to take over.

Make a Playbook

Once the PCA has been started between the firm owner and the partner company, creating a playbook and set of guidelines for the partner company to follow is very helpful. The guidelines should include all documents that ensure the firm will continue to operate smoothly in the owner’s absence. The playbook for the partner company should include:

  • Important passwords and other credentials to access databases and customer information
  • Standard procedure for future and ongoing assignments
  • Backgrounds of important clients
  • Client Demographics

Having a standard procedure for the new firm to follow will also help them understand the business process in a faster way while also assuring there is no decrease in customer service quality.

Periodic Checkpoints

It is important to note that PCAs are only signed for a short period (typically 1-2 Years). Check in with the status of the stand-in company’s management to make sure the business is running the way it should be before you decide to renew the contract. Several things could have happened during the time the stand-in firm served your clients that may have a negative effect, so it is important to continue keeping a hand on the pulse of the business. Periodic discussions with stand-in management will help better analyze business decisions that will be made for the future.; also allowing for you to make necessary changes if they are required.

Allowing for someone else to manage the business you’ve built may or may not be what you’re looking for. But if you do not want to train a successor, or get into a Practice Continuation Agreement, there is another main route you may be able to take!

Selling a Business

Selling ownership of your firm to another person or company is a very significant decision. The best thing that an owner looking to sell their firm can do is acquire the necessary knowledge about their firm, and potential buyers.


One of the first things that should be done is to analyze the worth of the firm that is selling. This should narrow down the list of potential firms that would be best suited to buy your business. Consulting with experts to consider the current market conditions and evaluate your firm will help you hone in on a fair and profitable selling price.

Organizing for the Future

Approach potential buyers with all the necessary information required. Keeping all client and financial information in one place leading up to the sale will help things run smoother and more organized. The owner that is looking to sell needs to consider what role they want to have once the sale is finalized. Whether this is an important or honorary position, it is important the business owner clearly states what role they want to be involved in before finalizing any deal.

Keeping Employees in the Loop

Once the deal is finalized, talk with your staff about the following:

  • Why the deal was necessary
  • What is expected out of staff in the future
  • Organizational changes

Discussing these things with employees is important because it will give them the time and opportunity to adjust to new management and changes that will be implemented moving forward. However, no matter which way you cut the cake, this will be a tricky process to navigate.

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