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