Helping your clients achieve success with succession planningArticle added by Wayne Minich on April 19, 2012
Ranked: #5253 (32 pts)
Just because someone might be interested in buying your client’s business or creating an affiliation with him doesn’t mean it’s necessarily the right fit.
It’s no surprise there are business owners out there who never plan to retire. These old-timers hope to work well past their 60s and 70s simply because they love what they do, and they can’t imagine what life would be like without their pride and joy: their well-earned success.
If your clients fall into this category, there are many options you can offer when it comes to outlining a plan to preserve their legacy.
I once tried to buy a practice from an older man who was a long-time heavy hitter in the northeast Ohio area. He was 84 years old, but he just couldn’t bring himself to let go of the company he founded and grew.
This scenario is a common occurrence among aging professionals, and because of this, our question then becomes, “How can we outline a succession plan that appeals to our clients?”
There are two choices when thinking about aging and progression in the business world.
1. Your client can stay in business and watch customers of their own pass or move away. He will lose revenue and may ultimately end up with no business at all.
2. Or you can work with your client to create a succession plan that will substantiate growth and income, ultimately allowing his legacy to live on through a successful business.
Quest for a suitable suitor
Sometimes, things just work out superbly — someone steps up, wants to purchase the business and lays out a respectable amount of money. In reality, this rarely happens. Most likely, your client will need coaching and help understanding the importance of building his succession plan.
Your job is to help them find a suitable successor who will allow the business legacy to live on through growing success. Maybe this person is found within the practice, in which case he assumes the role, already knowing the ins and outs of the business.
If this isn’t an option, you can also suggest the possibility of selling to a reputable outside interest. It’s important you remain committed to helping your client find the right fit for his particular business.
I compare the selling process to dating. Most of the time, we don’t marry the first person we go out with. It takes time to find the right match. So, just because someone might be interested in buying your client’s business or creating an affiliation with him doesn’t mean it’s necessarily the right fit.
When it finally clicks, as the advisor, you can serve as a valuable resource to your client through the marriage of their collective interests.
I recognize how lucky I am with the future of my practice. While I never really plan to retire, my eldest son, who has been working with me for 11 years, will assume my position if something ever happens to me. If your client dreams of having a family-owned business, encourage them to expose their children to their work.
My children all began working for me at age 14, and subsequently, two of them ended up joining me in my practice. If your client doesn’t have children who plan to follow in their footsteps, I would urge them to partner with a nearby university, giving them access to mentor top financial college graduates.
In the 90s, I hired a young graduate from Denison University, my alma mater. He worked with me for many years, until it was decided my son would be taking over my role in the future. He then decided to branch out on his own and start his first practice.
However, if my sons didn’t work for me, I had every confidence this young man would be able to fill my shoes as time went on.
My advice is to encourage your clients to think about succession plans early enough so they can either encourage their children to get involved early or hire young graduates and coach them to keep their legacy flourishing long after they leave the business.
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