Every financial advisory company will need to make a succession plan sooner or later, especially smaller firms that earn between $150,000 and $500,000 per year. This is because these are the companies that are particularly vulnerable to suffering financial losses if they haven’t planned for a change or loss in their leaders.
In a survey commissioned by TD Ameritrade Institutional, less than 20% of these smaller companies were ready to deal with a succession. In comparison; one hundred percent of those that earned over eight million per year were prepared for such an eventuality.
The problem with small firms is that they often haven’t scaled up to the point of having teams. With no team structure, there is no logical next-in-line for them, but this simply isn’t the case for larger companies. These will at the very least, have people who can take over and steady the ship for short periods of time until the true successors can begin their work.
So what can small companies do to fix this and ensure that they’re properly planning for the future of their business?
First, they can understand how naturally daunting it is to find the ideal replacements for their leaders and not beat themselves up about not having a plan in place yet. Secondly, they need to see the inherent benefits involved with developing a team structure. Thirdly, they must make a firm commitment to the perpetual growth of the organization, even after they have left to pursue other avenues in life. And fourthly, they must take fast action to implement the last two points. Should they want the necessary freedom to train a suitable successor, then this will be crucial.
Of course, finding the right person to take over for you can be very intimidating and will certainly be a long term strategy rather than short term solution. But it still needs to be done, and many is the firm that regrets not having made this a priority back during calmer times. Yes, you might not need a successor for another few years, but you’ll definitely need to use the current period to discover who that person will be.
What you also need to do is think about the next chapter in your life. It’s understandable that you might be still caught up in the identity of being a business owner and not yet ready to think about letting go of the reins, but that day is coming eventually. By sitting down to really think about how you want the next chapter of your life to pan out, you can generate real excitement for the future and a passion to kick start the process of finding a successor.
Succession Link has built an online platform that makes it easy and convenient for you to find the perfect buyer for your financial practice or to locate a practice that is the right fit for an acquisition and the growth of your business. Click the link to find out how Succession Link can help you.