You know the importance of having a continuity plan for your practice: it lays out what you want to happen to your practice when you are no longer running it. A continuity plan is also a great first step in creating your succession plan, but unlike a succession plan, a continuity plan is implemented immediately, rather than over a period of months or years, due to an unexpected disruption in your ability to work. Also, a succession plan typically assumes you will not return to run the practice; a continuity plan must also address the possibility that you will. Here are 10 reasons to stop procrastinating and set a goal to create a continuity plan by the end of the year.
Reason No. 1: Your clients
The circumstances under which a continuity plan will be implemented are always difficult, so having well-informed and supportive clients is essential. Having a plan reassures your clients they will be cared for even if you are unable to do so yourself. If you have clients who own businesses, this is also a chance to show them what planning for the future of their business looks like.
Reason No. 2: Your staff
What Your Peers Are Reading
If something happens to you, your staff will be on the front lines explaining the situation to clients, prospects, vendors and business partners. At the same time, they will be dealing with their own emotions—sadness, grief, fear, anxiety, possibly anger. You owe it to your staff to not only prepare a plan for what happens if you suddenly cannot run the business but to review the plan with them several times a year looking for anything that needs updating. They are the key to retaining your clients until you return or the business is sold.
Reason No. 3: Your family
Unless your family is involved in your practice, they probably have little understanding of how it works. They will be ill equipped to make immediate, important decisions to your practice’s survival in your absence. Like your staff, they will be dealing with powerful emotions, and as you’ve so often told your clients in assisting with their estate plans, that’s not the time to be making critical decisions. If the practice must be sold, the clock is ticking—clients need your services and if they believe you will not return, they will take their business elsewhere. That means the income your practice currently produces to support your family, and the value your family will receive if the business is sold, are dwindling.
Reason No. 4: Your business partners
If you partner with other advisors or work within a branch or financial institution, how will revenue generated from your clients be split while you recover? Will those who do the work in your absence get all the compensation? If you die, will your family get any of that revenue? If so, for how long? Don’t assume all compensation will continue to flow to you or your heirs. That assumption has been the demise of many successful advisor partnerships and left many widows and children with nothing from the business you built.
Reason No. 5: Your estate plan
If you die, and your practice is successfully sold, how will the proceeds of that sale impact your estate plan? How about your spouse’s estate plan? You need at least a basic valuation to gauge how taxes and other obligations, such as outstanding business expenses and payroll, might be addressed if your death or inability to work force a quick sale. Life insurance is one solution, but again, you need to know how much coverage is needed to preserve assets for your heirs.