Small business owners put their heart and soul into their business. Many take on the role of chief executive officer, chief sales officer, chief finance officer, and chief marketing officer as well as many other hats.
So it should come as no surprise that only 33% of small businesses have a documented and communicated succession plan. The most common reason: they don’t know where to start. After all, there’s only so much time in the day.¹
“Trust in the Lord with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight.” Proverbs 3:5-6
When we work with small business owners who are starting to explore succession strategies, we first walk them through some of the many choices available to them. In some instances, it can be helpful for them to speak with other small business owners who went through a similar process.
Once the business owner has a sense of what’s possible, the next step is to create a strategy. Does selling by the owner’s 65th birthday make sense, or is there some other target day to consider? With an end date in mind, and some choices to evaluate, the business owner has taken the first step.
“Seek God’s guidance. You will end up where He wants you to be,” wrote Mick Owens in his popular book, Diamond of Life: The Five P’s of Success and Significance
Small Business Stats2
Stats | Description | 33.2 Million | Number of small businesses in the U.S. |
|---|---|
61.7 Million | Number of small business employees in the U.S. |
46% | Percentage of the U.S. population that’s employed by a small business |
33% | Percentage of U.S. exports that come from small businesses |
Potential Buyers³
Who are the potential buyers for a small business? Often, the most obvious choice is someone who already is connected to the business in some way.
Selling your business to a co-owner: If the business has partners, one may be in a position to purchase your portion of the business.
A family member takes over: Selling to a child or family member who works in the organization is another option. However, such an agreement must be arranged carefully to help manage potential family conflicts.
An employee or friend wants to buy: Choosing to sell to an employee is a decision to sell to someone who may be experienced with your company and be familiar with its procedures and relationships. A friend might have less experience but may be willing to invest the time to learn.
A competitor is interested: Depending on the type of business you have, the most obvious choice may be speaking to a competitor who has expressed an interest.
Remember, succession planning is more than just selling your business. It’s about creating an exit strategy that considers your family, the community, your employees, and the emotional transition of leaving the business you worked to create.
¹ TeamShares.com, 2023
² U.S. Small Business Administration, Office of Advocacy, 2022
³ Equitable.com, 2023
