Business Succession Plan
University of Maryland University College
MSAF 670 Section 9040
At some point in our careers we all want to retire and move aside allowing somebody else to step up to our position and keep the business going. Nearly half of the businesses in the world have thought about this and have a completed business succession plan in place. The remaining businesses have either have an incomplete business succession plan or have not started one at all. This essay will cover the purpose of the business succession plan, why it is a challenge for companies to complete, and a few recommendations to overcome the challenges of a ...view middle of the document...
This leads to the reluctance of not wanting to let go of something that they have been a part of for so long. “Forty-two percent of senior partners cite a lack of confidence in the leadership ability of emerging partners as the single biggest challenge to succession planning” (Amato, 2013, p. 46). For example, there is a medium sized business with an even number of partners. Half of the partners believe Timmy is ready to become a partner but the other half are not confident in his abilities. Now you have a debate that will never be won. Therefore the remaining partners try to spread out the workload of the retiring partner.
There are five limiting beliefs about succession planning and the “next managing partner: (1) is the firm’s best business developer, (2) should be age 50 or older, (3) should be a professional CPA, (4) should service his own book of business, and (5) should be selected from the firm’s current pool of professionals” (Tierney, 2013, p. 13). These common misconceptions are creating challenges for the business succession plan. The next successor should be somebody who has the skill set, time, and will build the company up even better than it already is. If a business simply takes the next person in line then they are possibly short changing themselves.
Training is yet another challenge personnel are facing. In 2012, a survey was conducted by the AICPA Private Companies Practice Section (PCPS) and the Succession Institute LLC called the 2012 PCPS Succession Survey. This survey displayed informal training by a partner as a strategy to train their personnel to become a successor has dropped down to forty-seven percent. This is a nine percent drop within a four year period. A number of businesses are not properly training their employees to fill their shoes.
Businesses need to look within their own employee database to find replacements for their partners. The employees who are already working for the company are familiar with the business’ policies and procedures. They might not know everything about the business however if they are have been employed long enough or shown interest in learning how the entire business is ran then they are trainable. Partners need to create a list of employees who have the “right characteristics” and then establish a training program that will groom these...