Every business transitions at some point, but succession planning isn’t as simple as it was when business owners could typically count on the next generation to take on the job. The decision of who will take over your business when you are ready to retire is one that should be established long before you start making travel plans.

Kirsch CPA Group works closely with business owners to plan for their exit right from the start.

A solid succession plan is a strategic and customized process built around your business and goals. The Kirsch team provides coaching and hands-on services to help you through, including:

Accounting Services
  • Exit Planning: Kirsch can help you start the planning process now, whether the exit will be through acquisition, a merger, a new partnership, an asset sale, liquidation, an IPO, or a successor
  • Identifying Personal & Business Goals: Kirsch can help you separate personal and business goals to provide clarity around what you want
  • Business Valuation: if your exit strategy is to sell your business before you retire, Kirsch will assist in valuing your business
  • Ready for Sale: preparing your business for sale starts long before you want to sell, and Kirsch can help you increase your company’s value and resolve issues in advance – ideally at least five years before an anticipated sell date

3 Roadblocks to Successful Transitions

There are three major reasons succession planning fails and orderly transitions do not occur:

  • Lack of Planning: the successors aren’t prepared, trained, or experienced enough to take over management
  • Lack of Will: the owners do not want to give up control
  • Lack of Interest: family members have little or no interest in taking over the business and a successor isn’t identified prior to an owner stepping down (for whatever reason)

Successor Choices

In the case of an owner’s retirement, or following a death, family-run businesses have four basic choices.

  • Two require giving up a family tradition: closing up shop or selling the business to outsiders or non-family employees
  • The other two choices involve keeping the business under family control: by hiring outside managers to run it or passing the responsibility on to other family members

That final option of family succession, while traditional, can be difficult. Not every business that attempts it is successful. Family dynamics often play a major role in the success or failure of a transition.

While family-owned businesses employ 60% of the work force and account for 78% of new job creation, less than half survive to the second generation and fewer still make it to a third. Or, as it is often described colloquially, “The first generation makes it, the second generation spends it, and the third generation blows it,” and “shirtsleeves to shirtsleeves in three generations.”

Successor Choices

The Keys to Success: clear communication, the commitment of everyone involved, and getting started as early as possible. Bringing in an independent third-party facilitator, such as Kirsch CPA Group, can keep everyone’s focus on the goals and help smooth over the rough patches.

The experience and expertise of Kirsch Group financial advisors provide an objective structure for assessing the issues, developing a succession plan, and monitoring progress. Other professionals, such as insurance agents and bankers, can also assist in creating sound plans and follow-through steps.

4 Components of a Succession Plan

Successor Planning
  • Vision, Mission, & Goals: a succession plan needs to capture the founders’ original vision, mission, and goals, which provides successors with a foundation they can build on
  • Clear Expectations and Management Control: to short-circuit the potential for rivalry and disruption, compensation policies, management expectations, performance measures, job descriptions, and codes of conduct should be explicitly established, along with clearly defined roles: Who is entitled to join the business? How will non-participating family members be considered?
  • Financial Planning: succession plans should incorporate a business valuation, and address how to finance the buyout, cash flow, distribute retirement funds, calculate estate taxes, and plan for the inheritance of corporate and non-corporate assets
  • Timing: your succession plan needs a date of retirement, a timetable for training new management, and an outline of the role, if any, the founders will continue to play

Get Started Today

It’s never too soon to start: succession planning lets you confidently balance both personal and business interests and helps ensure that your family-run business can manage a smooth and successful transition.

If you would like to explore succession planning, let’s talk. Fill out the form below or call us at (513) 858-6040:


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