How to Create a Succession Plan for Your Accounting Firm


When you finally reach that stage where you no longer wish to continue working, it’s important that you have a plan in place so that the members of your business aren’t left scrambling while trying to find a smooth transition in leadership. Likewise, it’s important that you make sure your clients are well-taken care of in your absence.

For these reasons, a good succession plan for accounting firms is crucial. In this guide, we will detail all of the information you need to know about succession plans so that your firm will be ready when the time comes for you to retire or if you are forced to leave your position due to circumstances outside of your control.

Types of Succession Plans

There are essentially two main types of succession plans. Both of these plan types are vital for the success of your business, as they each address very specific situations.

1. Short-Term Succession Plans. These plans are equivalent to emergency plans. Short-term strategies are essential to have in place should an accident or sudden departure leave the current management unable to perform their duties. A comprehensive short-term succession plan for accounting firms effectively addresses any questions of who is legally responsible for company decisions and defines the individuals who will perform the search for a new, permanent leader.

2. Long-Term Succession Plans. On the other hand, long-term succession plans also need to be in place for accounting firms so that when managers and business leaders eventually make plans to retire or leave the company, there will be a smooth and orderly transition.

Having both short-term and long-term succession plans in place will ensure that your firm is able to continue operations regardless of what managerial changes or unforeseen tragedies may occur.


Updating Your Succession Plan

Succession planning is not just a one-and-done process. In fact, succession plans should be updated at regular intervals to ensure that the strategies still make sense for your firm’s current situation.

Updating your succession plan is, in some ways, analogous to updating your will. Situations and relationships will change throughout your lifetime both in your business and in your personal life. Therefore, ensuring that you maintain a regularly updated succession plan to ensure that everything will be taken care of in your absence is one of the best decisions you can make.

How to Create a Succession Plan for Your Accounting Firm

While your individual succession planning needs may vary, the following step-by-step process will ensure that you check all of the major boxes when creating your accounting firm’s succession plan.
1. Assemble Your Planning Team. You’ll want to have a diverse team of advisors involved in the succession planning process. After all, whoever takes over the managerial position is going to have to make decisions that affect everyone in your company, so these people should be represented as much as possible.
2. Perform an in-Depth Analysis of Future Industry Trends. How is the accounting field likely to differ from its current status in ten years? How will new technology affect the structure of your firm? It’s very possible that some of the factors for which you are planning will not even be relevant a decade from now or even a year from now, for that matter. Therefore, you’ll want to spend a considerable amount of time analyzing the current trends in the accounting world to make sure that your plans will still be applicable in the future.
3. Determine What Qualities and Skills You Need in a Successor. Sometimes it’s hard to define exactly what makes someone a great leader. Complicating the matter even further, is the fact that not all qualities that make a leader great in one field necessarily make for a great leader in another field. For this reason, you’ll want to take some time and think about which important leadership qualities are necessary for your firm to continue successfully serving clients after management changes hands.
4. Develop a Short List of Candidates. Now that you’ve assembled a team to help with the process, analyzed the industry trends, and defined the leadership qualities that will be most important for your business; it’s time to start generating some potential candidates. Often, future leaders can be found within your own firm. Loyal employees who show leadership potential should be strongly considered. However, you may also consider looking outside your company to fill the role. The internet has made it easier than ever to search for qualified candidates all from your computer. There are also consultants who specialize and are qualified to find the right candidates
5. Create SMART Plans. Many industries and self-help experts stress the importance of creating SMART plans or goals in order to ensure you will have a successful outcome at the end of the process. SMART stands for:

  1.  SPECIFIC. Don’t make your plans too broad or far-reaching. If possible set transition markers for the process.
  2.  MEASURABLE. Set benchmarks so that you can know you have achieved portions of your overall plan.
  3.  ACHIEVABLE. Ensure that your plan is realistic and not too lofty.
  4.  RELEVANT. Make sure your plan is related to the end goal.
  5.  TIME-BASED. Set clear timelines for when things will happen and when the plan will conclude.
  6.  Example: “I will finalize my long-term and short-term succession plans for my accounting firm by the end of next month by having generated a list of at least 5 potential candidates and a document containing explicit instructions on how leadership will change hands when I retire or when I am no longer able to perform my duties.”

You may have a slightly different plan based on the nature of your firm’s specific needs. But the above example provides a general way to incorporate SMART planning into your firm’s future.

Maintaining a Well-Oiled Machine

Before your firm can transition to a new owner, it needs to be running smoothly. You can leverage a program like TPS Cloud Axis to help your firm run like a well-oiled machine. Designed exclusively for accounting firms, our practice management solution helps your firm accurately capture time, expedite billing, improve client communications, and run detailed reports that provide a high-level view of your firm’s performance.

Getting your practice running like a well-oiled machine is the first step to preparing it for succession. Schedule a free 15-minute consultation with one of our team members today and see what we can do together to prepare for tomorrow.

Having both short-term and long-term succession plans in place will ensure that your firm is able to continue operations regardless of what managerial changes or unforeseen tragedies may occur.

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