A sole practitioner’s career can be very rewarding and fulfilling. But what happens when you’re ready to step down? If you haven’t thought about succession planning and future-proofing your practice, now is the time to ask some searching questions.
Successful and sustainable succession planning needs to be a consistent part of your business strategy. This can be particularly challenging for a sole practitioner who’s so busy dealing with the day-to-day tasks of running a practice that they have little time to think about the bigger picture and what to do with the practice upon retirement.
Often, with the compounding daily responsibilities and tasks, succession planning is left to the end of the sole practitioner’s tenure. As a result, the practitioner falls into the ‘endgame’ trap of last-minute succession planning.
However, succession planning should be treated as an ongoing process, built into the overall business plan from the outset. This means having a tailored strategy and vision for your practice from its inception, an understanding of where it is going, as well as a plan for expected outcomes like retirement or sale of the practice. With a well-planned transition, there’s also more time to ensure that all milestones are met before stepping away.
For most practitioners, the aim of succession planning is to effectively transition client relationships to the new successor while maximising the value of the firm as a result of the transfer. These two are inextricably linked. The foundation of any succession plan rests on why clients select and stay with you in the first place – and what will keep them with your successor should you choose to hand over your practice to them.
It may take years to find the right person who is prepared to take the reins of your practice with the same vision and passion. At the same time, senior sole practitioners need to be aware of what core legal, business and technical skills a newcomer needs in order to effectively future-proof their practice. More seasoned practitioners need to be flexible and accommodating when selecting a successor and recognise that some of the traditional approaches that worked in their practice when starting out may not be as relevant or effective moving forward.
If you are considering stepping down from your practice, ensure your successor has a robust plan for integrating your clients into their practice. You should be comfortable that they can provide your clients with the same level of service and billing structure they have been receiving. Assuming the basics match up well, the endorsement you provide your successor will also have a big impact on your existing clients’ perception of the new practice.
Sole practitioners who fail to recognise the significance of succession planning can significantly jeopardise the longevity of their practice. However, planning early and creating a viable strategy to finding and grooming a suitable successor can mean your practice will not only survive, but thrive.
Here are some key tips that sole practitioners should keep in mind:
- Set a succession date well in advance: Keep it realistic and allow five to seven years, if possible. A date less than three years away could cost your practice time and money.
- Allow adequate time to find and groom your successor: It will take time for your clients to build trust and understanding with your successor as the practice transitions into new hands. On top of this, the successor needs adequate time to build key leadership skills and evolve into the role, with your supervision and guidance.
- Keep yourself relevant: It’s common for sole practitioners to retain a small percentage share of the practice and also retain a certain portion from clients they brought into the practice from the outset. This means that as the successor moves the practice forward, the relationships you formed with some of your long-term clients remain intact.
By thinking long term and building relationships between your successor and clients, you can ensure the longevity and success of your practice well after you’re gone.