Whenever I talk about succession planning, the one question I always get asked is, "I don't have anyone to take over my agency. What do I do?"

The hardest part for me, when I thought about my succession plan, was finding the right person to take over. It took me years to find someone I felt comfortable with, someone my clients liked, and someone that could take over the company and keep it running.

If you’re in the same situation, don’t procrastinate. Here are some questions to consider when you’re looking into who should fill your shoes.

Do you have any employees?

If you’re self-employed and don’t have anyone working under you, consider talking to agents who have a similar clientele. Ask them:

  • What have you done to protect your business in the event of a what-if scenario (early unforeseen retirement, disability, or death)?
  • How do you run your business? What are your philosophies on sales, client experience, staff management?
  • If my company were to be your succession plan, would your staff and clients be comfortable with me?
  • Would you consider having your business take over mine in such a scenario?

If the agent or agency seems good, then discuss setting up an agreement to buy each other’s business if either one of you decides to retire, becomes disabled, or passes away. You’ll want to get your attorney and CPA involved to make sure you’re doing everything correctly.

Are you incorporated?

If you don't remember anything else in this article, please remember this:  People die.  Corporations do not!

If you’re already incorporated and have an insurance practice, the only thing you need is a corporate officer with an insurance license. The corporation continues to receive commissions (for some Medicare products, you may also need to be Medicare-certified to get paid the Medicare commissions).

If you’re not incorporated, all commissions could end that month, as there is no living licensed agent to receive them as a sole proprietor. Be sure to check your agent contracts!

Do you have a pre-retirement plan?

A pre-retirement plan is something you should currently have in place, so if a “what-if” scenario occurs, everyone knows there is a plan in place and what their roles and duties are.

An option is to look at a company like Retire With Renewals that works with agents who are considering retirement, and that works for agents who want to protect themselves in case something unforeseen happens.

When a plan is in place, it makes your employees feel better knowing they’ll continue to have a job, and it makes your clients feel better knowing your company will always be there to help them. You’ll be surprised at how many of your clients might want to know about your plan, as they might have similar situations in their firm.

Can one of your employees run the business?

Before you think about who to pass the torch off to, consider the following:

  • Are they a licensed agent who can sell insurance?
  • Do they have business knowledge/experience?

What about family members? Could one of them run the business?

If you have family members who could step up and take over, consider these additional questions:

  • Are they currently working for you, and do they have the respect of your employees?
  • If you have to retire or if you pass away, can they step in right after?

Whether you’re considering an employee or a family member, if the answer to any of the above questions is yes, you may have found your successor. If the answer to any of the above questions is no, you may still have a problem.

When should you start your succession plan?

The short answer? Now.

You wouldn’t start searching for health insurance to protect you after you got sick or injured. The same goes for a succession plan. You wouldn’t wait until after you retired to start making those kinds of decisions.

Every business owner should have a plan in place for that “what-if”. What if death or disability strikes? It can happen at any moment, regardless of age. You must have a plan to keep your business running, so it can continue providing income to your family, and so your employees still have a job to go to.

The bottom line

Once you decide who will take over and run the business, ask them if they want the job (and hope they don’t say “No thanks!”). If they say “yes”, what’s next? It’s time to get planning! Here are some questions to get you started.

  • What will the agreement look like?
  • What formula is used to figure out how much you get paid?
  • What are the tax consequences on the payments to you or your family?
  • How long do you or your family continue to get paid if a family member is not running the business?

At Retire With Renewals, we are here to help you protect your business and your income. We can help you work out the answers to these questions and provide you and your family peace of mind.

Let's talk.



Photo by: fizkes