Succession Planning from the Owner’s Perspective

We have noticed recurring patterns while working closely with business owners on succession planning. Some owners begin the process with enthusiasm, only to stop abruptly. Other owners, even with a plan in place, report feeling unprepared during or after the transition. To better understand these patterns, we partnered with Dr. Rachel Sturm, a professor at the Raj Soin College of Business at Wright State University. With the assistance of Dr. Sturm, we conducted a survey of over sixty business owners from Ohio and the Midwest region. The results revealed several key themes behind stalled progress and feelings of unpreparedness.

Biggest Barrier to Progress: Time

 About 40% of respondents cited lack of time as the primary obstacle to succession planning, especially among small business owners. This isn’t due to a lack of effort; 86% reported working between six and eleven hours per day. According to psychologist Alice Boyes in a Harvard Business Review article, people often prioritize tasks with the most immediate deadlines, even if they’re not the most important. As a result, long-term planning like succession often takes a back seat to daily emergencies.

Another 25% of owners said they simply didn’t know where to start, highlighting a lack of clarity around the process itself.

The Elements of a Comprehensive Succession Plan

 Our Succession Blueprint outlines seven essential elements:

1. Identify stakeholder concerns and define an “ideal state”

2. Determine and develop the next generation of leadership

3. Ensure operational processes, controls, and documentation are in place

4. Analyze strategic and valuation options for ownership transfer

5. Consult legal, tax, and estate planning professionals

6. Create a liquidity and investment plan to meet post-sale lifestyle goals

7. Develop a personal life plan for the transition beyond ownership

While over 60% of respondents recognized the importance of elements 1, 3, 4, and 5, only 20% considered a personal life plan to be essential. Without serious attention to this deeply personal issue, some owners discover the personal satisfaction derived from running the business disappears and the search for a new purpose becomes a daily struggle. The survey also revealed a significant number of owners had 60% or more of their individual net worth locked up in their business. Such a high level of concentration requires proper planning pre-sale and post-sale.

For the reasons mentioned by other authors in this series, an owner should not underestimate the importance of developing the next generation of leadership.  Ensuring that the right people are in the right seats can be a key driver of business value.

Top Challenge to Transition: Letting Go

 The most common concerns around selling or transitioning a business were:

• Doubts about whether the right people are in place to lead

• Belief that the business can’t succeed without the owner’s involvement

In many cases, it’s not just operational readiness but emotional readiness that holds owners back. This is especially true for those over 55, with over 40% saying they struggle to find something that replaces the satisfaction of running their business.

Improving the Odds of a Successful Transition

To make meaningful progress, owners should shift their mindset from working in the business to working on the business. Breaking down the seven elements into manageable steps can make the process feel less overwhelming. Delegating more responsibility to future leaders not only frees up time but also builds confidence in the business’s ability to thrive without the current owner. Ultimately, a business that can’t function without its owner may be perceived as less valuable by potential buyers.

If you’d like to explore the survey results further or discuss your own succession plan, we invite you to connect with David Ray or Matthew DiCicco of the Eubel Brady & Suttman Wealth Management team.

The information presented is for educational purposes only and is not intended to serve as a substitute for personalized advice or as a recommendation of any succession strategy.  Dr. Sturm’s role included survey design and data analysis and shouldn’t be construed an endorsement of EBS.