Empowered Succession Planning: Lessons Learned from Decades of Experience

As a fractional CFO specializing in family-owned businesses, I’ve witnessed firsthand how lack of preparation can devastate even the most successful companies. 

I recently discussed these principles on the Journeys of Not So Ordinary People Podcast with Dr. Joe Hamlett and Dr. Dave Peltz. We explored the emotional and financial challenges of succession planning, along with practical strategies to prepare for the future. The conversation highlighted why so many businesses fail to plan adequately and offered actionable insights for owners looking to protect their legacy. I encourage you to check out the episode here for a deeper dive into these critical topics.

One of the most staggering statistics I often share is that 50% of family businesses fail within two years of the owner’s death. That’s why I’m passionate about empowered succession planning—a proactive, thoughtful approach to ensure your business continues to thrive beyond your leadership.

So, what does “empowered” mean in this context? It’s more than having a basic plan; it’s about deeply understanding the financial, emotional, and operational factors that keep your business running. Succession planning isn’t just a financial exercise—it’s a personal journey for the business owner and their family. Many owners avoid discussing what will happen when they step back, partly because their business is tied to their identity. But the consequences of not planning are dire, impacting not only the company but also the livelihoods of employees and the family’s legacy.

Addressing the Emotional Challenge

One of the biggest obstacles is getting business owners to think about life beyond their leadership. It's understandable—stepping back from something you’ve built over decades isn’t easy. But I always ask a simple question: What happens if you get hit by a bus tomorrow? Most shrug and say, “We’d be screwed.” That’s the wake-up call.

The reality is, waiting too long to address succession leaves your business vulnerable. By taking control and creating a well-thought-out plan, you secure not just your company’s future but also your peace of mind.

Financial Preparedness and Legacy

Early succession planning allows for strategic, rather than reactive, decisions. Whether you want to pass the business to a family member or prepare it for an external sale, having 5-10 years of preparation makes all the difference. It provides time to optimize financial performance, implement growth or profitability strategies, and ensure the business remains attractive to potential buyers.

Financial literacy is another crucial component. Too many business owners don’t fully understand their numbers, yet they handle finances themselves. This can lead to blind spots and missed opportunities. Fractional CFO services, like what I provide, help demystify financial data and guide owners through complex transitions.

Preparing for the Unexpected

Contingency planning is vital. I’ve had clients who were prepared when economic downturns hit because we developed backup plans. The same principle applies to succession. The goal is to create a business that isn’t solely dependent on one person. This might mean grooming internal leaders, automating processes, or simply organizing key documents.

Moving Forward

If you’re a family business owner in your 50s or 60s, now is the time to take a serious look at your succession plan. Ask yourself: Do I want my legacy to be one of failure or sustainability? My role is to help you navigate this journey, minimize emotional stress, and ensure that your business thrives for generations to come.