Owner Practice Perfect
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Succession planning: How to make the most from your practice

11th Aug 2017
Owner Practice Perfect
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the key to the business

Some of us may have been fortunate enough to enjoy a summer break and take the time to reflect on what we really want from our businesses. At some point, we have to consider our exit strategy and plan for that eventuality.

Without a plan and timeframe, we risk selling ourselves short and not receiving the return on our investment for building a successful practice over many years. This, of course, will directly impact when we can officially retire, work fewer hours and enjoy the lifestyle we’ve aspired to.

Key stages in planning for succession

Keep an open mind: You don’t have to firmly decide at the outset whether you want to sell your practice outright or sell to partners within the firm. The planning process to ensure your practice is valued at a premium is the same for both eventualities.

Set a timeframe: Set a date when you would like to exit the business and how much you would like or need to retire on. Those two figures may not be similar. Everyone has an approximate number in their minds when they think of ‘what annual income do I need in the future’ or ‘what I think my practice should be worth’.

Where you are now: Take a cold look at your practice now as if it were a client. What is it worth now? What do you need your practice to be worth in order to achieve your goal? Identify the gap and the timeframe you set to give you a target of what needs to be done.

Main headline areas to address

The things that will ensure your practice are valued at a premium:

What is unique about your business and why do clients use your services? It’s not just about meeting deadlines and filing accounts on time. That’s a given! Survey clients and obtain evidence on what makes you different and why clients stay with you. What is it that they are really buying?

How well do you know your client base? Grade your clients (not just based on what they pay you each year-use qualitative measures too). Draw up a menu of services of everything you do as a firm then look at how many of these services are used by each client.

Identify where there are gaps: Clients not using you for all the services you can provide. Are you missing opportunities? Identify the opportunities and establish why clients aren’t using your firm. You will either increase fee income by doing this or find out why clients aren’t using you.

Never underestimate the power of negative client feedback: It will create an opportunity to retain a client. Clients value accountants for ‘putting something right’ and will hold you in higher regard for listening and caring enough to do something about it.

Staff - are they valued, skilled and happy? What can you do to make them feel valued and more so, ensure that they will be an asset to the firm in the long term?

Staffing is an expensive and challenging area for accountancy practices. Having a happy and skilled workforce makes the business more valuable and attractive when planning for succession. Without staff, a practice can’t function.

Financials- are your own management accounts up to date and accurate? Many practices don’t have reliable information and ‘lock up’ in debtors and work in progress can scream mismanagement or when examined closely; something any buyer or incoming stakeholder will do.

Technology- where are you with optimising technology to improve production work flow and client service? Is significant investment required?

Systems: how reliant is the business on you as the owner? The more systematised production processes are then the higher the value of the practice. Any firm that is overly dependent on one person will be perceived as potentially unattractive to a third party.

Over dependency means clients may resist moving over to a new ‘handler’ and be perceived as ‘clients at risk ‘of leaving. Incoming partners will also view very close client relationships as a burden often meaning long hours worked and few holidays without continual interruption from clients.

Your role in the business: Are you merely a technician doing compliance work or a real partner managing the business and doing what only a partner can and should do? It’s a tough question to answer truthfully but an important one in terms of what you need to focus on to make your practice more attractive and your exit strategy achievable.

Threats: are you aware of the threats to your practice? Competitors, clients coming to the end of their service life with the firm, staffing challenges, geographical considerations, pool of potential new clients, office space to grow into, cash tied up in debtors and work in progress and the list goes on. Identify what is relevant to your business and plan how to manage these threats.


Of course, most of the above is based on a simple SWOT analysis and won’t be anything new to you. It’s good to be reminded of the basics and simple stuff that makes a real difference when valuing your practice.

Consider this entire exercise as having duality of purpose in that it is something you can offer clients as a service. The greatest testimonial for a client will be the fact you have completed this process on yourself.

Once you have identified your headline issues then you have the basis for an action plan. A small but consistent step is the key to making progress. You are only going to sell your practice once so it’s worth devoting time to ensuring that transaction is a fair reflection of you’re the hours you’ve put in during your working life.