Apr 22 2022
Define your objectives
By Matt Pais
Business continuity planning is in the best interest of the producer, their clients, the industry and society in general. Developing this strategy provides many new opportunities for you, including but not limited to:
Grow client base or AUM. Expand your clientele and revenue possibilities by looking beyond your practice to purchase another practice or a partial book of clients.
Generate new business. Through acquisition, your practice can expand its reach and broaden the opportunities that are possible with your clients and partners.
Expand service offerings. Perhaps you will gain clients who require you to expand your or your team’s capabilities. Perhaps you will bring on new staff to meet the needs of your clientele. In either situation, more services can facilitate more business with more people.
Specialize. Can another practice help establish your business as the go-to experts for a particular clientele? Changing the nature of your practice can help you zero in on your specialty and the ideal clients you can help.
Reduce client base. You never want to leave your clients in need without anyone to help them. If you are considering a change in your practice, such as retirement or a reduction in work, a merger or sale can do that — and requires considerable planning to ensure the proper transition.
Prepare for retirement. This process doesn’t happen overnight. Through the proper preparation, you can ensure that you are passing your practice and your clients to the right person or people.
Find economies of scale. By merging your practice with another or purchasing a book of clients, you may be able to increase your production at a lower cost due to changes in staff, more efficiency in who you work with or otherwise.
Refocus your role. The only way to change your responsibilities is to make a change in your practice. That could mean beginning the transition of moving leadership tasks to your successor or merging with a practice where you will remain working but adjust your role.
Of course, after you understand the why behind this planning, you need to decide what to do. The action you take today will serve your best interests and, more importantly, the best interests of your clients. While many factors need to be taken into consideration when developing your own business continuity plan, below are three options that can serve as a “blueprint” as you move forward.
As you think about the future of your practice, do you plan to …
Buy — You may think you don’t have the time or the need to develop a succession plan when you are still trying to grow your business. However, taking some steps now, and as you get closer to retirement, will build a strong foundation and pave the way for your practice’s eventual transition. In the meantime, this guide will help you follow the necessary steps for acquisition and growth. Buying can help you grow your client base, generate new business and expand your service offerings.
Sell — Are you ready to transfer ownership of your business? Whether you plan to pass the torch to a family member, a mentor or an outside buyer, you will need to consider numerous factors that could affect the process. Selling can help you right-size your client base to focus on your specialty, refocus your role and prepare for retirement.
Merge — Are you planning to merge with another practice to scale the business or adjust your role? You’ll need a short- and long-term plan in place to ensure you find the right partners to provide the best outcomes for you and your clients. Merging can help you expand your service offerings, refocus your role, find economies of scale and prepare for retirement.
Explore your next step in buying, selling or merging your business in MDRT’s Business Continuity Decision Tree: mdrt.org/decisiontree