Effective Succession Planning in 5 Steps

Oct 9, 2017 | Finance

If you plan to retire in three, five, or 10 years, do you have a succession plan in place?

Is a structure established for your practice to continue thriving in your absence? How do you go from working as an owner-doer to an owner-investor with a legacy in place that lets you focus on enjoying the next chapter in your life?

As a business owner, you strive not only to deliver the highest-quality care to your patients but to build solid value within your practice. And when it comes to making sure that value keeps growing long after you’ve exited the daily grind, nothing takes the place of proper succession planning.

With so much riding on your business’s future, don’t leave your exit strategy to chance. Take charge with these five steps from senior business analyst Sam Haney, who shared his insights on successful succession planning in a recent Audigy webcast.


Start Your Succession Planning Now

Whether seeing patients, paying the bills, making payroll, or handling an employee issue, the hustle, bustle, and urgency of daily business operations can easily push succession planning to the back burner. Such planning, however, can prove crucial to achieving key personal, professional, and financial goals, so it’s never too early to start.

“Everyone knows they’re going to exit their business eventually,” shared Haney, “but the problem is, it’s always, ‘Oh, it’s three to five years, maybe it’s five to 10 years,’ but those years pass by really quickly. So sitting down and actually putting that to paper — it’s vital.”


Visualize Your Success

What value must your business deliver to secure your desired future for the next 20 or 30 years? What type of legacy do you want to leave with your business? What type of individual would you want to transition your business to?

Planning a successful transition out of your business requires knowing what success looks like — on your terms — in both qualitative and quantitative metrics:

  • Qualitative — What legacy do you want to leave in your community?
  • Quantitative — What is the actual number needed to help you fulfill your retirement goals?

Together these two metrics paint a complete picture not only for you but also for those helping you execute your plan — including identifying and nurturing the right talent to continue what you’ve successfully built.


Work With a Financial Adviser

When it comes to calculating how much you need from the business to achieve your desired quality of life, get the help of a professional rather than sort it out alone.

“We would recommend that you work with a financial adviser first to see what it is that you need for your retirement,” said Haney, emphasizing a business’s typical role as “either your No. 1 or No. 2 largest asset.”

Added Haney, “A financial adviser is going to be able to mathematically tell you what that asset needs to be worth and what you would essentially need to sell it for someday — or transition it to a key individual within your practice — in order for you to be secure in your retirement.”

Audigy works closely with a Vancouver, Washington-based financial advisory firm that has helped myriad members determine the number they need out of their business for retirement or any other purpose, such as an equity earn-in plan.


Follow the Ownership Maturity Model

A business involves multiple stages from launch to retirement, so how can you move through those stages successfully? By following the Ownership Maturity Model, which provides a path of succession, helps ensure both staff and patients are taken care of throughout the business’s life cycle, and protects the business’s role as a valuable asset within your financial portfolio.

“The Ownership Maturity Model is essentially an illustration of where you exist currently as a business owner, broken down into three components,” said Haney, “the owner-doer, the owner-manager, and the owner-investor.”

Progressing through the stages allows you to ultimately move away from the daily hands-on responsibility of generating the bulk of the revenue; put other trusted leaders in place to manage operations; and concentrate instead on community outreach, business expansion, and legacy building.

“The owner-investor is really the person growing the legacy, growing the footprint, and working on those transition plans,” said Haney. “As you grow through the Ownership Maturity Model, the owner-investor stage essentially allows you more freedom to focus on your succession plan.”

Count on Audigy to Help With Your Succession Planning

Did you know? More than 70 percent of business owners lack an exit plan and aren’t doing anything about it, according to Securian Financial Group’s 2015 survey of small-business owners across the country.*

At Audigy, however, members have experts in human resources, operations, finance, and more to help them develop their succession timeline; refine their quantitative and qualitative requirements for success; cultivate future leaders for their practice; build their legacy; and transition out of the business.

“The member’s entire Strategic Business Unit — including experts such as the operations manager, human resources manager, and finance manager — is essentially that one-stop shop for putting a plan together,” said Haney.

You’ve worked hard to build your business, so make sure a plan’s in place for its future and yours. Learn more about how Audigy is helping practices create succession plans and expansion and acquisition strategies.