Successful succession: internal ownership transitions and what really matters.

• Author: Cingoranelli, Dominic
• Position: PracticeManagement

the founding owners of many small to midsize CPA firms often build organizations tailored to their skills. The result of this is that the firm doesn't work without them.

When it comes to succession planning, the issue is less about training future leaders and more about what existing leaders have put in place that will handcuff future leaders.

To find and eliminate those barriers and build a successful succession plan, owners should examine the following modes of operation of a firm: Survival, Safety Net, Success and Continuation.

Survival

At this initial stage of entrepreneurship, there is an instinctive drive by the owners to pay for the roof over their heads and put food on the table. Owners are thinking about where the next work will come from and keeping the doors open. Usually owners depend on their own skills and hard work, building limited support infrastructure.

Safety Net

Once the firm has the resources to cover the owner's basic needs, the focus turns to building the business to generate enough cash to pay off business debt and create some financial security for the owners. Still, there is a tendency for owners to lean heavily on their own skills and work, while building an infrastructure that helps them be better at what they do.

Success

Here, owners work on building the firm and its processes around key people in the organization to maximize their talents under the management and control of founding partners. This is as far as many firms go.

Continuation

This mode requires founding partners to step back into the shadows and allow others to evolve. This stage normally requires an organization to abandon the mode of operation that has been responsible for much of its success and restructure itself.

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The firm's success, reputation and strengths still are reflective of the owners. Indeed, the firm's identity is wrapped in the founding owners. The challenge is to create an organization that has its own identity. The owners need to start taking actions that will enable the firm to survive and prosper long after they retire.

What Happens Next?

The founding partners can stay involved after identifying the need to step back, but they will need to take a much less prominent and dominant role in the firm. This means owners need to build processes around organizational roles and responsibilities--not the skills of specific individuals. Why? Because when you take individuals out of these systems, the systems typically...