Survey Reveals Surprising Trends in Succession Planning

Ensuring the company is in good financial health, processes are optimized, customers satisfied and sales growing are a few of the tasks business owners focus on. There are no shortage of tasks and issue to occupy the typical owner’s attention. It’s common for most to focus on the business and not to consider their future, how they will one day need to transition out of the company, and how it will be done. After all, no one wants to plan for their own exit from something they have worked so hard to create. However, not planning for the future can be very costly when the day to exit arrives. Unfortunately, according to a Business Owner Succession Planning Survey conducted by CNBA/Financial Planning Association, there a low number of business owners that have a written succession plan in place. To help clients, prospects and others understand the survey results and impact on succession and company viability; Sikich has provided a summary below.

Surprising Results

The survey polled 182 financial planners that specialize in small business financial planning across the United States about their clients. What was uncovered is certainly surprising! According to responses, less than 30 percent of planning professional’s clients has created a written succession plan. What makes this figure more concerning is that 78% of plans indicated that their clients intend to use the sale of the company to fund retirement. Given the lack of planning it’s clear that many business owners will be surprised to learn their expectations may not be easily met.

Additional Findings

Below is additional information from the survey, which provides insights into the attitudes, beliefs and expectations of planners clients about the future of their company and the transition process.

  • 33 percent of small business clients find that relinquishing control is the biggest challenge when it comes to succession planning;
  • 28 percent struggle with finding a buyer;
  • More than half of small business owners plan to sell their businesses to employees (23 percent) or family members (31 percent);
  • Less than 50 percent of small business owners include family members in the succession planning process.

Family Succession Planning

While less than half of those surveyed will include family in the succession process, it’s important to be aware of the host of issues that family succession can create. From the survey:

  • 50 percent of respondents cited that equalizing the business owner’s estate with non-employee children was one of the largest issues;
  • 45 percent struggled with distributing executive control among family members and children successors;
  • 42 percent were uncertain about family members and their children’s ability to run their business;
  • 31 percent demonstrated concern over employee and customer willingness to work together;
  • 31 percent worried over fighting within their family.

The Succession Planning Challenge

It’s clear from the survey results that succession planning is not a top priority for many business owners. Considering the future of the business without their involvement is emotionally taxing and often times unpleasant. However, comfortable or not, succession planning should be a priority. Although unpleasant, it’s far better to ensure there is a way to fund retirement than simply waiting until the need is pressing and dealing with the added stress and anxiety. 

Contact Us

There are a number of issues that proactive succession planning can help address long before the date of transition arrives. Carefully considering how a company will be transitioned ahead will allow for plenty of time to address unexpected issues and concerns. If you need assistance developing a succession plan, Sikich wants to help! For additional information please contact Ray Lampner, CPA, at 330-572-8014. In a brief consultation he can assess your needs and determine the best way to proceed.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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