You Built It for Decades. Have You Thought About What Happens to It Next?
We asked a business owner this question once and he laughed — not dismissively, but the way you laugh when something catches you off guard.
"Honestly? Not really. I figured I'd deal with it when I was ready to retire."
"When is that?"
"Maybe in ten years. Maybe sooner."
"Then we should probably start talking about it now."
Why succession planning gets delayed
It's not that business owners don't care about this. It's that it forces a conversation about stepping back from something that has defined a big part of their identity and their life. That's emotionally complicated just like a lot of topics in financial planning.
And practically, it involves a lot of moving pieces — who takes over, how they're compensated, how ownership transfers, what you get paid out and over what timeline, what role (if any) you still play.
Those questions don't have easy answers. And so people may put them off.
The problem with waiting
When succession planning starts too late, your options can shrink. A sale to an outside buyer takes time to prepare for — you want the business running well, financials clean, not dependent on you personally. Transitioning to a family member or key employee may take even longer, because that can involve the person needing to be developed, trusted, and financially capable of taking on ownership.
That takes time.
An owner's health can change unexpectedly and there's no plan in place. The business would need to be sold quickly, under pressure, and maybe for less than it's worth without optimizing taxes. The family may be left scrambling. That's what planning is designed to help prevent.
Your options may be more varied than you think
You can sell to an outside buyer — a strategic acquirer, a private equity firm, a competitor. You can sell to a key employee or a management team, often through a structured buyout. You can transition ownership to a family member over time. You can bring in a partner and step back gradually. Or you can keep running it with less day-to-day involvement, bringing in management to handle operations.
Each of those paths can have different financial implications, different tax outcomes, and different personal implications. The right one depends on what you actually want your life to look like — not just what's most financially optimal on paper.
It's bigger than the business
A good succession plan isn't just about protecting business value. It's about protecting your family, your income, and your legacy. It's about making sure that something you spent decades building doesn't unravel in a way that could have been prevented.
If you've been putting this off
The question is how many options you want to have when you finally get to it. The earlier you start, the more potential options you'll have.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.