When professionals begin thinking about a succession plan or an exit strategy for their business, many challenges arise. Many professionals are so busy with day-to-day activities that they do not have time to think about planning for their business after-the-fact. I know I was once guilty of this!
One main challenge that most professionals face is that they are required to be licensed, and most state professional regulatory authorities limit ownership to licensed professionals. Unfortunately, a professional does not have the ability to pass ownership to future generations unless the professional’s children happen to follow in their footsteps.
To have a plan which entails all the fundamentals of a successful business is one thing, but to have a plan that sustains a business in your absence is another. Whether you are taking a vacation or a long extended vacation with no return, what you put in place during your presence is what will essentially decide the sustainability of your business in the future. With healthcare being such an extremely complex field, it is essential for physicians with their own practice to set up a succession plan. A succession plan will ensure that in the their absence, particularly after death or retirement, the protocol put in place, will either sustain or dissolve the business in the way they want.
There are a few predominant questions that you should keep in mind when creating a succession plan.
When should I prepare for business succession?
How can the process of creating a business succession plan be started?
What will be the legal implications involved?
There is no better time than now to prepare for a business succession. It is unknown to anyone when the owner of a business will become absent either temporarily or permanently. If it is known that the owner will be retiring in the near future, a smooth transition will be beneficial to the company, thus, having a business plan is essential.
The process of creating a business succession plan can be started by gathering the right team. The defining factor regarding the success of the physician’s practice lies in the hands of the operating team. Whether this team is a long term or short term team also plays a key role. Discussing issues and making sure the operating team and the key owners are on the same page is vital to the succession plan.
The legal implications involved in a succession plan will be over the ownership of the company. What is written in the succession plan and estate plan of the owner is what essentially will be followed. Attorneys will and should be involved in this process.
In case of a sudden absence such as death or illness, it is important to have each day planned out as if the owner could just walk away and the business would be sustainable. This will be covered by specific guidelines and procedures to be followed by the practice outlined in the succession plan. Methods of operation is the most important; this includes, customer service, payments, human resources, marketing and a chain of command.
Succession planning is not a fixed event. It must be continuously evaluated and improved to ensure it has your interest at play at all times. You need to ensure that your succession planning is aligned with your mission and core values so that you identify successors who are on the same page with your company strategy and culture, who can then continue your success.
Attorney Sarah Gulati of Gulati Law, P.L., is a Florida real estate and business attorney with offices in Orlando and Jacksonville, who helps business professionals plan and protect their business ventures. She can be reached at Office@GulatiLaw.com.