When starting a business or practice, an entrepreneur’s primary focus will be in getting the enterprise off the ground. As the business matures, you may begin to think about retirement and an exit strategy. For a professional practice, where the practitioner is the brand, this can be a bigger challenge.

Many of the elements of ownership transition, which are discussed in depth in this Scotiabank series, will be the same for an independent practice. You will need to have a demonstrably profitable enterprise, a built-to-sell system – essentially a turnkey operation that can generate strong profits without you.

For enterprises that produce a physical product – such as farm products, restaurant food or manufactured goods – it can be much easier to put such a system in place. Much of the value of these businesses are in their products and their physical assets, the factories and the farms.
For professional practices, however, the main selling point is more abstract. Although your office space is a consideration, the practice’s true value arises from the trust that you instill in your clients or patients, the quality of your services and the relationships you have cultivated over the years of your practice.

For professional practices, one of the preferred methods is internal transition. For this, you want to have in place a partner or associate who has gained an intimate knowledge of your practice as well as the trust of your clients.

Grooming a successor can be a more intricate process than arranging an outright sale of a brick-and-mortar business. Where possible, it’s advantageous to identify your prospective inheritor early. You will want to have ample time to groom your successor and to ensure that they are a good fit for your firm and your patients or clients. You also want to make sure to instill loyalty and that the person you select is committed to the continuance of your practice.

With a reputation- and relationship-driven enterprise, finding the right successor can be the most important part of your ownership transition. Following this, you can begin the legal and financial aspects of the transition.

For more information on how to do this, check out our short guide to succession planning for your business and the Scotiabank Ownership Transition Tool.