Business Succession Planning: How to Prepare for a Smooth Transition

The Hard Truth About SMB Succession: Most Owners Aren’t Ready

Here’s a statistic that should make every SMB owner stop and think:

➡️ 70% of small businesses lack a buyer or a succession plan

➡️ Only 30-40% of businesses listed for sale actually sell

➡️ Of those that sell, only a fraction get their asking price

(Source: Investment Bank & Teamshares Research)

The takeaway? Most small business owners will struggle to exit their business on their terms.

Why? Because they don’t start planning early enough.

It reminds me of a restaruant owner in Colorado I became friends with. He's been trying to sell his business and has for years. Similar to his situation, I’ve seen this play out time and time again for other SMB owners.

The owner spends decades building and working IN the business, only to realize too late that without a structured plan through working ON the business their options are limited.

What Happens When SMB Owners Don’t Plan for Succession?

🔹 The Business Becomes Unsellable – If a company relies too much on the owner, buyers walk away. They don’t want a business that falls apart the moment the owner steps back.

🔹 Employees & Customers Are Left in Limbo – Without a clear transition plan, employees are uncertain, customers lose confidence, and key relationships break down.

🔹 Owners Are Forced Into a Rush Sale (or Worse, Closing Down) – When retirement, health issues, or unexpected life events force an owner out, there’s little time to secure the right deal—often resulting in selling below value or not at all.

Succession planning isn’t just about selling—it’s about protecting the business, the employees, and the owner’s financial future.

3 Common SMB Succession Planning Mistakes

1. Waiting Too Long to Start Most SMB owners don’t think about succession until they’re ready to step away. By then, it’s often too late to maximize business value.

🚨 The Fix: Start planning 5-10 years before your ideal exit timeline. A strong succession plan gives you options, even if you don’t plan to exit soon.

2. The Business Can’t Run Without You If the owner is the key decision-maker, the main salesperson, and the operations expert—it’s a red flag for buyers. No one wants to buy a job.

🚨 The Fix: Transition from owner-centric to system-driven. ✔ Develop leadership within your team. ✔ Document processes so the business runs smoothly without you. ✔ Create an advisory structure for long-term business continuity.

3. No Clear Financial & Legal Plan Many SMB owners underestimate the legal, tax, and financial complexity of succession. A handshake deal isn’t enough when selling or transitioning leadership.

🚨 The Fix: Work with a trusted advisor to structure your transition correctly. This includes:

✔ Business valuation & financial due diligence.

✔ Tax-efficient exit strategies.

✔ Clear agreements for leadership transition or sale.

How to Start Your Succession Plan (Even If You’re Not Ready to Retire Yet)

🔹 Step 1: Assess Business Readiness – Ask yourself: Could my business run without me for 6+ months? If not, start delegating leadership and systemizing operations.

🔹 Step 2: Define Your Exit Goals – Do you want to sell? Pass it to family? Transition leadership internally? Each requires different planning.

🔹 Step 3: Get a Business Valuation – Many SMB owners overestimate their company’s worth. A professional valuation sets realistic expectations.

🔹 Step 4: Build a Leadership & Transition Plan – If the next owner or leader isn’t identified and prepared, the business will struggle post-transition.

🔹 Step 5: Document Everything – A clear, legally sound succession plan ensures your legacy and business value are protected.

Final Thoughts: Smart Owners Plan Ahead

Most SMB owners don’t plan for succession because they think they have time. But the best transitions happen long before the owner decides it is time to step away.

✔ Succession isn’t just about selling—it’s about building a business that lasts.

✔ Whether you plan to exit in 2 years or 20, the time to start planning is now.

✔ The stronger your systems, leadership, and processes, the more valuable your business becomes.

📌 Thinking about succession? Let’s start the conversation.

I help SMB owners create structured transition plans that maximize business value and ensure a smooth exit—whether that’s in 2 years or 20.

📩 dotys@odysseyexecutivecoaching.com