To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around You

While thinking about succession planning might feel like anticipating a landslide (here's to you, Fleetwood Mac), there are strategies you can implement to manage the uncertainty and the transition.

By Mark Valentino

published 27 June 2025

in Features

An older woman and her adult daughter smile as they discuss business issues in the older woman's office. — (Image credit: Getty Images)

The aging of the American population continues to accelerate, and more small and midsize business owners are wondering: What do I do with my life’s work when I retire?

Many business owners reaching retirement age are considering handing off their business to the next generation, whether a family member, a colleague or an outside interest.

Data from the U.S. Census Bureau shows that just over half (52.3%) of U.S. employer-businesses are owned by people who are at or near retirement age, while 51% of the current American business market is owned by Baby Boomers, who are set to transition within the next 10 years.

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According to Barlow Research, 41% of small businesses (with revenue between $100,000 and $25 million) plan to transition the ownership of their company in the next five years. Of these, 28% plan to sell or transfer to a family member.

This rapidly advancing retirement cliff demands that business owners begin implementing a focused, holistic succession plan, yet many are unprepared.

Owners of roughly half of U.S. businesses surveyed either plan on closing their business or do not have a plan. This is especially prevalent for small businesses, with only 30% of small business owners having a succession plan.

Why succession planning is so important

Why is a plan so important? The long-term survival of a business and the legacy of the owner depend on it. Only 30% of family-owned businesses survive from the first to the second generation, dropping to 12% from the second to the third generation.

This high rate of failure can be attributed to a number of factors. Some business owners are unwilling to prepare in advance.

In some circumstances, the emotions that come with selling one’s life's work overwhelm their ability to put a plan into action.

Finally, some owners may believe that they can easily undertake their succession themselves.

Yet we frequently see that these individuals and their families move too quickly and emotionally, without considering the multiple dynamics at play.

Calling your accountant or banker from the signing table may open a can of worms that should have been dealt with in advance of signing a deal.

In other cases, perhaps you haven’t dealt with your personal finances, and your lifestyle will change due to a different income level without the business’ income (even if it’s sold for a substantial dollar amount).

However, the challenges are by no means insurmountable. By working alongside a trusted financial professional who specializes in the ins and outs of succession planning, business owners can be confident that they are well prepared for the transition to retirement.

Elements to consider when succession planning

Finding that support is crucial when working through the numerous dynamics that we routinely see throughout the succession process, including:

Timing your exit. The ideal timeline for exit planning is 18 to 24 months, allowing for comprehensive planning and taking advantage of tax benefits. Planning should start as soon as possible, even if the business owner is not ready to exit immediately.

This includes creating contingency plans and bringing in key personnel to ensure the business can continue in the event of unforeseen circumstances.

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Identifying the right successor or buyer. Sometimes, owners are approached unexpectedly by brokers or private equity firms, triggering rushed transitions that can disrupt family dynamics and financial stability.

Having a succession plan in advance is a key part of building long-term wealth and business health.

Managing the culture of the business and family members. Family governance is crucial when involving family members in the business. Open, honest conversations are necessary to align everyone's values and expectations.

Trust and communication are key to successful transitions, and experienced advisers can help navigate these complex situations.

Regular planning. Ongoing financial planning is essential, as circumstances can change. Regular check-ins and reevaluations are necessary to adapt plans as needed.

This includes considering the impact of increased costs or changes in family dynamics on the overall financial plan.

A trusted partner can be the difference between a successful and failed succession. Leveraging the experience of specialists can help ensure that decades of work are rewarded to their full extent, and the next generation is primed to build on an owner's legacy.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Mark Valentino is President and Head of Business Banking at Citizens. Under his leadership, the Business Banking team brings comprehensive advice and solutions to help small businesses operate at every stage of their journey. Mark rejoined Citizens in October 2023 after leading a privately owned healthcare provider in Southern California. During that time, including his role as CEO of LA Downtown Medical Center, he dedicated his energy and efforts to expanding mental health access to the underserved communities of greater Los Angeles.