Can Your Agency Survive Without You?
Article By: Kimberly Bunce
If something unexpected happened, could your agency survive without you? How would this affect your family, partners, employees, and clients?
Whether planning for the unexpected or for retirement, creating a succession plan - often referred to in the industry as a perpetuation plan - might be the best gift you could give to set your agency up for future success. It involves identifying and preparing future leaders or successors to ensure the smooth transfer of ownership, leadership, or both.
With an investment of time spent planning now, a well-thought-out succession plan can save your agency, and in turn, protect the ones you love. To help you get started, here are some components to include in your plan and questions to consider:
Exit Strategy - What is your long-term objective for your agency? In your plan, define whether you want to maintain family ownership, sell externally, or have a partner or employees buy out your share.
Successor Identification - Consider who you want to succeed you, whether a family member, employee, or external candidate. Take into consideration the skills and expertise of each candidate and develop a plan for training and/or mentorship, if needed.
Ownership Transition Plan - Provide an outline of how ownership will be transferred. Will it be a gift, sale, or inheritance? Will there be seller financing? Be sure to address all financial considerations, including valuation of the agency.
Leadership Transition Plan - Define roles and responsibilities during the transition period. Include a timeline for handing over leadership duties.
Financial and Legal Considerations - Prepare buy-sell agreements to manage ownership changes and address tax implications. Consider securing insurance to support the transition.
Operational Continuity - Document critical business processes and key contacts to ensure continuity of relationships with customers, suppliers, and employees.
Communication Plan - Once finished, clearly communicate the succession plan to stakeholders, including key employees, family members, and partners.
Performance Metrics - Establish benchmarks to measure the success of the transition and monitor progress and adjust as needed.
By proactively addressing your agency's succession plan, you can ensure continuity and pave the way for future success.
During her tenure with SFB, Kimberly Bunce has been involved in numerous insurance agency transactions, including partner buyouts, partner buydowns, and agency refinancing. Kimberly's experience as a CPA and her attention to detail helped these transactions run smoothly. For more information, contact Kimberly at 715.930.7877 or at kbunce@sfbank.com.
