Making important decisions is just part of the daily routine of owning a small business. It’s a stressful position to be in; the consequences fall squarely on one individual, for better or worse. With that much control and influence over business operations, it can be difficult to imagine what the future of the business will look like after your retirement. When that day comes, you need to have sufficiently planned for the transition, both for your personal wellbeing and for the future success of your business. Particularly in industries such as funeral homes, which are frequently family-owned and small businesses, it’s crucial to have an accounting partner with the necessary experience to guide you through the process. At Bowman, we help clients deal with this problem all the time. Bowman & Company LLP’s Partner Nicholas Colanzi, Jr., CPA, recently spoke on a panel for KB Publications, the distributor of American Funeral Director magazine, on how to position all stakeholders in the best way possible when it comes to succession planning.

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Succession Planning 101: Things to Consider

Bowman professionals understand that owning a business has more at stake than financial success. Since your business is the culmination of your time, effort, and vison, it’s a reflection of your personal reputation. That’s why succession planning is about more than jumping ship; it’s keeping the boat afloat once you’re gone. You care about your business, and you don’t want to see it go underwater. Here are some of the things you should do to prevent that from happening:

1. Clean Up Your Financials – It seems obvious, but the best way to ensure continuity is to avoid your successors from inheriting financial hardship. Are your records organized? Are your debts settled, or at least manageable? Make sure that you are complying with financial regulations, and that your successors know exactly where things stand moving forward.
2. Choose Good People – If you have any sort of sentimental attachment to your business, you’ll want to leave it in capable hands. It’s much easier to choose a successor that is aligned with your own visions for the future of your business. They should have the technical skills, wisdom, and leadership necessary to achieve goals. Is your successor going to pursue growth? Will they respect your employees and clients? Just because somebody has components of leadership qualities, or the financial means to purchase your business, it doesn’t mean they’re the right fit. Be honest with yourself while naming a successor whether you are truly comfortable with that individual in charge.
3. Let Your Employees Know Their Standing – Business relationships can be complicated, especially when family is involved. Things may have been running smoothly with you in charge, but the last thing you want to do is leave behind a leadership vacuum. Your employee’s roles should be clearly defined, the chain of command needs to be established for the next generation of management, and you need to be aware of what your employees are expecting in your absence. Is your next owner or manager established from internal promotion? Is a family member or outside party stepping in to fill your previous role? Sometimes, people expect to inherit positions or responsibilities in your absence that you were never intending to give them. Be definitive when you name your successor.
4. Establish Your Own Role – You might be getting out of work entirely, or you might want to stick around in a limited capacity. Know the answer to this before the transition of leadership begins. Once you relinquish ownership, respect the fact that you’ve taken that action. You don’t want to continue to act as if you own the business, undermining your successor. On the contrary, maybe you need to adopt an approach where new leadership eases into the role. Whether you’re walking away immediately or easing your successor into the position, decide before it’s too late to avoid confusion and give your business the best chance at maintaining efficiency.

The Experts

The roundtable discussion included professionals from multiple states, services, and viewpoints. Hosted by KB Publications’ Reporter, Tony Russo, the discussion included many of the topics in this blog article. Panelists included Chris Cruger (CEO, The Foresight Companies, LLC, AZ), Jake Johnson (President & CEO, Johnson Consulting Group, AZ), Andrew Kennedy (VP of Funeral Home & Cemetery Lending, Live Oak Bank, NC), and our Commercial Service Department’s very own Nicholas Colanzi, Jr., CPA. In the funeral home industry, business owners turn to experts and resources like American Funeral Director magazine to stay ahead of the curve. While this roundtable discussion is directed at this niche market, the lessons learned apply to nearly all industries.

Planning your exit from your career is just as important as planning your entry. Don’t hold off on these actions until the last minute; talk with your accountant now to develop a strategy that results in success, fulfillment, and comfort. Nick practices in our funeral home niche group, but also provides tax & accounting services to individuals, professional service firms, and more.