Is Business Succession Planning Taking the Fun out of Your Business?
Is just thinking about your business succession taking a toll on you? Are you afraid to make a mistake and ruin years of work in the process? Are succession worries taking the fun out of your business? Do you wish there were a way to avoid this stress and make succession work?
You’re not alone. Research tells us that while advisors promote succession planning to their clients for business purposes, they are woefully unprepared themselves. A recent SEI Advisor Network study shows that only about 17% of advisors actually had a succession agreement and barely twice as many had any plan at all. So, less than a third are preparing for the inevitable.
A compounding factor is that succession is now a topic of discussion in the financial media. You could be putting your business at a competitive disadvantage if you don’t have a solid plan in place. Clients and prospects will start to wonder about their long term security without you. They will wonder about your planning skills if you haven’t planned to take care of them. Looking unprepared will not help your brand.
But, you can eliminate or reduce your succession stress, drive up business today, increase your business sale price and improve your image in your community at the same time with a different perspective on succession planning. I call it “Succession as a growth strategy”. This approach puts success back into succession.
The problem with traditional succession planning – the one so many are afraid to tackle – is that to many – let’s say your clients and community – it seems like the inadvertent “Lame Duck Creation Strategy”. When senior advisors bring in “successors”, it appears to many people and advisors too, that you are “retiring” and new people are taking your place.
Your public succession plan unintentionally made you redundant. You’re out and the business’ future is all in the new people.
This is what scares many senior advisors. It’s why almost 7 out of ten won’t even give succession planning a second thought.
“Lame ducks” end up busy answering questions about their retirement and taking good wishes for the future. They cut themselves out of the action. Who needs that when you are still active and want to stay active?
What’s worse, traditional succession essentially disempowers you just when you are likely at your very best technically and practically and maybe at the pinnacle of your success financially. This is why so many advisors have trouble developing their succession plan. It feels like they are planning their own “business funeral”. There’s not a lot of stomach for that sort of thing. The excitement there is all negative.
What’s more, when your competitors hear the retirement news, your business becomes a target for the sharks looking for new clients, meaning your current clients. You also put a scare into your good clients who now wonder what will happen to them and who will be their advisor. You make it more difficult to take on new clients since you have broadcast you are apparently slowing down. It’s a preventable self-made disaster, the traditional way.
But there is a better way – a way that builds your business and looks like a rebirth rather than a passing on.
Understand this. Succession is internal business talk and is not necessarily for public consumption. We talk about succession among insiders but not outside the business. The marketplace never needs to know your succession plan directly but you can still have one.
Instead, you can grow and build your business so succession is obvious and eliminate the problem altogether. Instead of succession, talk about growth. Plan for and announce that, due to growing market demand, you have added an associate (or two) to help meet the needs of your growing clientele.
Your helpers today are your successors later. Say that you are expanding to help more not falling back into the shadows. Who can’t be excited about being and appearing to be more successful?
When you build a team well before you want to slow down, you create obvious succession without talking about it. That avoids the traditional problems. You provide better service. You attract more business and referrals. You build your marketplace prestige. You become stronger, not lame. You will also be able to stay with your firm longer and do as much or as little as you want to do with your clients. All this because you built a team that supports you and has grown your business.
When you make succession a growth strategy, you put the success back into succession. You build your business legacy and don’t threaten it. You increase your income today with more business, improve your competitive situation and eliminate succession fear. You also grow the industry by providing homes for new advisors and helping them develop. It takes some planning but makes succession natural and simple.