What Would Happen to Your Firm If Today You Stepped Off the Curb and…?

By Steven E. Sacks, CPA, CGMA, ABC

Things happen. That’s the more civilized way to lament the daily travails of life. You are the managing partner. Today, you lose your largest client, your “go to” tax manager informs you she is quitting —  and it’s tax season, your office gets flooded and your on-site server is destroyed, or any of the other infinite possibilities short of death? All these things can put a real crimp in your day. You know what? I’ll go even further. You did not see the car careening around the curve as you entered the crosswalk to get into the parking garage.

Then, there’s a global pandemic…

In a flash, your life has changed, or it may no longer change because it ceased to be. Be assured, I am not being flippant. What will happen to your firm? Did you create continuation contingencies? Have you considered who will do what and when and with whom? Do you have the right technology infrastructure to ensure business continuation?

More often than not, firms experiencing a major trauma did not have the necessary protocols in place. This prevented them from maintaining productivity in key areas and evaluating long-term changes.

An accounting firm is built for permanency; humans are not. To ensure  permanency, you want to make sure that the firm has the right people in the right positions with the right tools.

Have You Thought About the Future As You Approach the Curb?

Do you think about your firm’s future? Have you considered a succession plan or maybe a firm to merge in or merge with? Are you cultivating the next generation of firm leaders? Do you have programs in place that will provide the professional and personal growth for the next generation, or is this considered more of an operating expense than an investment?

And if you are considering the future, how far ahead are you thinking? I say that the answer lies between one year and many years, but if you pin me down, I will say a reasonable timeframe is four or five years. This is sufficient time to see that the successor has made sustainable progress in moving into the leadership role. If within the first couple of years you see that you’ve made a misjudgment, then you have enough time to make a mid-course correction.

While I use the four-to-five year timeframe for a succession plan, this does not mean that you should not be looking at the plan each year. Why? Unforeseen events can arise, such as an illness to the managing partner or another key member of firm leadership. Are you prepared to make the changes required?

It’s Not All About You

Ask yourself this question:”What are my full responsibilities to clients, staff and my family?” A small firm of three or less partners/owners needs to ask this question with absolute seriousness. The impact of your death or disability on staff, clients and family is devastating, emotional and long-lasting.

Every year, every month, every week and even every day stuff happens that can impact your succession plan. One week you may have to zig; the next week you may have to zag. If you treat your succession plan like you treat your facilitator-led strategic plan, you’ll have just one more thing to gather dust. The strategic plan involves mostly activities. The succession plan, however, involves real-live people.

As much as you pride yourself on your business acumen, you don’t have a crystal ball. If you did, all you need to do is play the multi-state lottery just once and then all your immediate worries would disappear.

You Never Want to Hear “I Told You So”

Firms seeking to survive and thrive may encounter any number of unanticipated obstacles. A key partner in charge of an office decides to go with another firm because of cultural issues; the tax manager has had enough of the tax partner and causes an office rift; a staff person acts inappropriately at a major client, thus ending the relationship with the firm; and your business developer becomes seriously ill, and there is no one else who can handle the responsibilities.

These are just some of the incidents I have dealt with. These are people matters. What will you do to solve them so that your firm can continue? Do you need to move your people up the leadership ladder faster than you planned? Will you need to poach from other firms? Will you be forced to merge upward?

Without considering as many contingencies as possible, your firm can be one accident, departure, illness or death away from ending operations.

“If only we gave more thought to this” will be leadership’s lament. No amount of rationalization will help. So you have great clients…now. What about tomorrow? You create false equivalencies with prior firm challenges you thought you overcame. You delude yourself into thinking that this can easily be solved like all other problems. Uh, not really.

You can’t postpone the issue of a succession plan because it’s busy season, or people may not like what they hear and seek opportunities elsewhere to grow. Or even during a pandemic when the thought of leadership transition takes on a greater sense of urgency. This is business. Your business. A business you want to continue long after you’re gone.

So before you step off the curb, even before you approach the curb, take a look at your surroundings to see if there is something potentially dangerous that is lurking just around the corner.


About Steve

Steven Sacks is the CEO of Solutions to Results, LLC, a consultancy that specializes in helping individuals, firms and organizations meet the challenges of communicating with clarity and purpose. Visit his website at www.solutions2results.com.