Five Reasons Why Every Business Owner Should Have a Succession Plan

Five Reasons Why Every Business Owner Should Have a Succession Plan


National studies find that less than 20% of business owners have succession and exit plans.  From our experience, the 20% estimate is high.  In reality, very few business owners have plans in place.

There are five reasons why every business owner should have succession and exit plans in place:

#1 – Every business will be sold or liquidated while the owner is alive or after the owner dies.

#2 – On average, 75% of a business owner’s personal wealth is in their business.

#3 – 50% of private company sales and liquidations are triggered by unplanned events – including disability, illness, death, divorce, and other life events.

#4 – The owner of most small and mid-sized companies is typically the driving force in the business – and is a major reason for the company’s success.  In many respects, the owner is the business.  When the owner goes away, so does the business.

#5 – Unplanned ownership transitions or liquidations produce bad outcomes for business owners, their families, and their company.

Having succession and exit plans in place is like life insurance.  It isn’t a “top of mind” issue with most business owners – but it should be.  Their financial future, their family’s financial security and their company’s future depend on it.

Building on our experience in helping more than a hundred business owners successfully transition ownership of their company, Corporate Performance Group developed NEXT, a leadership succession and exit planning playbook for business owners.  Learn More

By Bruce Skaistis

Business Owner Briefings (“BOB”) is a coaching blog for business leaders and owners. Advice provided in BOB comes from our experience in helping hundreds of business owners become more effective leaders, improve the performance of their companies, and monetize maximum value when they recapitalize or sell their company.