Succession Planning for Accountants
Recent data released by the American Institute of CPAs states that less than 50% of accounting firms have a documented succession plan in place. That is slightly better than the 35% of business owners that have a formalised succession planning process, but the AICPA says that 80% of accounting firms “expect succession planning challenges in the next five years”
“Physician heal thyself” – this is very much the plumber with the leaky tap.
Many experts on business succession planning point to an urgency regarding the process and particularly in professional services firms (including accountants) as the baby boomer wave approaches retirement (even those who delayed are now looking at exit). Over 10,000 people per week are turning 65 in the USA and in Australia that number is over 5,000.
The first baby boomers turned 65 in 2011 and many delayed retirements and continued working but they cannot do that forever, as they age and experience health issues etc working full time becomes less attractive.
If accountants do a simple profile of staff (especially senior staff) and see how many are approaching retirement in the next 5 – 10 years – Who will take on these key roles? Manage clients and teams?
The time to resolve this issue is not at the retirement function but NOW.
In better news, the survey report states that 60% of practice owners in the plan to start the succession process in the next year or two or have already started the process and will complete it within that time frame.
Many underestimate the time and effort involved and a well-managed succession strategy (both Ownership Succession and Management Succession) will take between three and five years to design and implement.
Starting is often the most difficult step as it often requires a conversation between owners and senior staff – many founders find talking about their baby and their own exit far too difficult.
The AICPA report offers a very elegant answer: “Succession planning gives firms the power to set the tone and direction with which they wish to send the firm into the future.”
Not managing your own Succession can see the firm stumble into the future, perhaps with a fair share of internal disputes, jeopardising the firm at self and threatening the well-being of employees and clients and perhaps ensuring you will leave no legacy because your “baby” will be irretrievably damaged.
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