Getting your tax and accounting firm ready for retirement

While many firms are still experiencing the Great Resignation—staffing issues associated with the pandemic and the ability to work remotely—there’s another matter that has been going on for years: retirement.

If you own your own firm, and even if you’re a sole practitioner, it’s not uncommon to see accountants looking to exit their firms with an internal succession plan, or selling the firm so they can retire and move on to other things. Knowing what you want to do will help you put a plan in place to achieve the end you ultimately have in mind.

As someone who has helped numerous clients put a succession plan in place and build systems to make their firms saleable, as well as selling my own bookkeeping and accounting practice, it’s absolutely critical to think and act on this before you actually need to make it happen. And remember, you don’t have to be retirement age to get your plan in place.

People helping people is not a saleable model with a high business value.

To help you decide which option is right for you, consider the following five questions:

1. Do you currently have a systemized service offering? Could someone walk into your firm today and read through your procedure manual; you have one, right? Would they know exactly how to operate your firm? This kind of system is fundamental to being able to scale your firm.
2. Have you nurtured relationships that could eventually lead to a sale or succession? The time to build new relationships is now, not when you want to leave your firm in one month, several months down the road, or later. If you don’t already have these types of relationships in place, start reaching out to people or companies, or at the very least, partner with for referrals.
3. Do you have a generalized templated service offering you can put in place prior to a succession or sale taking place? Ideally, you should have a templated plan, from onboarding clients to disengaging with them. With this plan, a new partner or owner can take the plan and run with your services seamlessly.
4. Do you have annual contracts in place with your clients? Your firm will be more valuable if you have long-term contracts in place. If you are currently going month-to-month, consider offering specialized pricing for longer-term contracts.
5. Do you have a practice that is differentiated? If you have a unique set of clients and serve a specific niche, you might have the ability to charge a premium for your practice when it comes to a sale. Likewise, you would have a system for service delivery that allows your practice to offer something truly unique.

Watch your costs

You most likely have a lot of work to do. But whether you have a succession strategy or want to sell your firm, try to keep your internal operational costs really low. Whomever comes in likely has their own team—and won’t want to keep your resources on payroll when they buy or take over your firm.

Another big takeaway: People helping people is not a saleable model with a high business value. It’s also not easy from a succession or sale planning perspective. Instead, think about packaging your services, any products, and the operating system or software.

What you really need are processes and procedures in place, a lucrative book of business, and assets clearly defined in order to have a firm that is attractive to others who may want to own it or succeed you as the principal. If you aren’t there yet, start building it today. You’ll be that much closer to being in control of your own destiny when it comes to the future you want for yourself and your firm.