Quick Guide to Small Business Succession Planning

 By Robert Bartley, CPA, CFP® (with Eleanor Merrell)

close up of handshake between businessmen

If you’ve spent most of your life and career building a small business as a founder, you probably think of it as almost a part of yourself, which can make succession planning difficult to consider. You’ve poured years of hard work, long hours, and your professional best into your business. 

But eventually, the time comes when you need to relinquish control of your business to someone else. This most commonly happens because you’re planning for your eventual retirement, but it can also happen because you’re simply finished with the stress and long hours of owning your own business and want to try something new. Health and family considerations may come into the decision as well.

Whatever the reason, it’s a fact that eventually you will be unable to lead your business. This can be an occasion of mixed joy and sadness, or another set of emotions entirely. But however you feel at the approach of this prospect, and even if it’s years away from happening, you need to put a plan in place to keep your business running and growing long after you’ve stepped down as the head. 

This is where succession planning is a vital exercise for small business owners. A thoughtful, strategic succession plan will ensure your business survives and even thrives without you – it lives on as your successful legacy. This guide for small business owners who live in and around Bedford, New Hampshire, Andover, Massachusetts, or elsewhere will cover everything you need to know about succession planning so you can put your own plan in place to protect the business you’ve worked so hard to build. 

Chapter 1

Why Is Succession Planning Important?

Chapter 2

How Can Succession Planning Increase the Value of My Business?

Chapter 3

Who Needs to Engage in Succession Planning?

Chapter 4

What Should a Succession Plan Look Like?

Chapter 5

Ownership vs. Management Succession

Chapter 6

How Succession Planning Ties into Estate Planning

Chapter 7

Why Your Financial Advisor Should Shape Your Succession Plan

Chapter 8

Succession Planning with Bartley Financial


When you run your own small business, it’s natural that you would be the center of the company for a long time. But eventually, you’ll need to step down or leave to fulfill your retirement dreams, and then a sizable hole is left in the company’s leadership. 

This is the point where many small businesses fail, even ones that were highly successful with their original founder in place. These failures occur because succession planning is a highly valued exercise, but one that many small business founders put off for too long – or don’t do at all. 

But knowing who will lead your company after you leave is the way to ensure your business lives on without your leadership. Identifying and developing the future leaders of your business is essential for all roles in your business, but especially for the ones at the top – and that’s what succession planning is all about. 

Succession planning is important because it helps you prepare your business for the future strategically, instead of just reacting to retirements and role changes as they happen. While sometimes you’ll know in advance if a critical employee – or you – will leave the company, other times you’ll potentially be caught off-guard as an unexpected departure happens. This is exactly when small business succession planning is most important, because you’ll have a plan in place for what to do next.

By creating a succession plan well in advance, business owners can maximize the value of their business for a more comfortable retirement and successful legacy.


Small businesses that neglect succession planning (which is, unfortunately, more than 75% of them) are at a disadvantage for many reasons beyond just planning for personnel changes. 

Succession planning doesn’t just provide you with peace of mind about the future – it can actually increase the value of your business when it’s done correctly. Potential investors, stakeholders, and purchasers will have more faith in your business if you can demonstrate that you’ve done the hard work of planning to keep your business stable and successful in the future. It significantly reduces risk to have a strategic succession plan in place, and that makes your business more valuable and enticing to investors and potential buyers alike, which means a more comfortable retirement for you.

It’s also more difficult to recruit talented employees and executives without a succession plan in place. During the recruiting process for small businesses, many candidates will ask about your succession planning, especially if the founder is nearing retirement age. Without a clear plan in place, those talented candidates may shy away from the uncertainty and choose to work with a competitor instead.

Despite the importance of small business succession planning, a 2017 Nationwide poll revealed that three in five small businesses do not have a succession plan.

The reasons why are varied. Some small business owners simply feel they don’t have the time to start succession planning. But others are under the impression that only large companies need to create succession plans. In reality, succession planning is just as important for small businesses as it is for massive companies for all the reasons listed above. 

So, who should be involved in the succession planning process? The owner, of course, should be deeply involved.

You should also involve any key stakeholders in the discussions leading up to the decision. They will be able to help you think of any gaps in your plan, point out any potential leaders among your employees or family, and guide you through the complexities of the process. This could include family members, company executives and leaders, your financial advisor, your CPA, your lawyer, and anyone else you think might have a thoughtful point of view on the topic. 

Succession planning is much more than just picking a successor from your employees or family, or deciding to sell your company, although those are certainly important considerations. It’s also a complex emotional, financial, and legal proceeding when it’s done correctly. Bringing in a team of experts will make sure you have a complete plan in place to cover whatever happens in the future.

No two business succession plans look alike. Each small business is different, and that’s true for small business owners as well. However, most small business owners will need to balance the following considerations when creating a succession plan:

How much control do you want to retain over the future of the business? 

As a business founder, you’re used to being in control. You may dream of stepping down from the day-to-day responsibilities and headaches of running your business, but still want to have a say in major decisions and the future direction of the company as long as you’re able. With some succession arrangements, it’s possible to still play a role in your business. However, you’ll find that other arrangements don’t allow for this.

Be clear ahead of time about what role, if any, you want to play in the ongoing operations of the business.

Do you want to sell the company, or keep it intact with a new leader? 

Selling your business can generate significant income that can give you the retirement you’ve always dreamed about. It can also be a good option if your family members and employees haven’t expressed interest in leading when you leave. However, you may choose to keep a financial stake in the business, especially if you anticipate that its value will increase in the future and desire to continue collecting profits.

How quickly are you looking for the process to move? 

If you’re looking to retire next year because of changes in your life or health, you will have a pretty short timeline to complete your succession planning. This is why it’s recommended to start the planning process years before you’re thinking of leaving so you don’t need to rush into these critical decisions or undersell your business.

Presently, it’s possible for small business owners to divvy up ownership and management during succession. Dividing these functions of succession is especially common when the business owner wants to remain involved in the business, or when the succession occurs between family members.

Involving family members can be both very important and emotionally complicated. Giving control to just one family member might seem simplest, but it can lead to hurt feelings. And allowing control by too many family members can lead to difficulties in managing your business successfully. It’s a tough balance to manage, so it’s best to be prepared for these conversations and emotions to come up while you’re in the planning process.  

Commonly, families retain ownership while the daily management transfers to the most capable employee. Management succession can be even more important than determining who will own the company when it comes to long-term viability. Choosing the wrong CEO can lead to a rocky transition and lead employees and investors/stakeholders to get nervous and depart. 

That being said, transferring management to outside the family doesn’t need to be a permanent arrangement. You can plan to bring in a new outside leader to bridge the gap between your departure and the time when another family member will be ready to assume leadership. This could involve significant mentoring and training so they’re equipped to lead when the time comes. 

It all comes down to this – the management of the business and preserving family wealth and assets might well be separate goals in your succession process. The two don’t always go hand in hand – in fact, they may be at odds with each other. Transferring control of management and ownership separately might be the right option for both your business and your family, but you should consult with your succession planning team to ensure you’re making the right choice for all involved. 

Succession planning is about much more than just leadership. There can be significant tax and estate planning implications in the process as well.  

Ensuring that your succession plan is integrated with your estate plan can help mitigate the tax burden of your succession, better protect your legacy and assets, and promote your and your family’s goals and objectives.

You shouldn’t leave these items to chance. You have several options to minimize your taxes and avoid probate, like creating an ILIT (irrevocable life insurance trust), forming a family limited partnership or family limited liability company, or transferring business assets to your children and establishing a trust for yourself to retain a source of income. 

All these options are complex and come with various pros and cons – and getting your succession planning wrong can have serious financial and legal consequences. There is a lot of room for error and multiple choices to make along the way. That’s why getting expert guidance is so important when you’re planning your succession. 

One of the experts you should certainly involve in any succession planning discussions is your financial advisor.  Preferably, you should work with one that is knowledgeable about small business and succession planning or works closely with your CPA. Your business ownership is a significant source of your wealth and finding the best way to preserve everything you’ve worked hard to build over your lifetime is essential. 

Executing this planning process alongside your financial advisor will help you set yourself up for a comfortable retirement, transition your assets while minimizing your tax liability, and ensure your business and your wealth are both secure for the future.

Robert Bartley, the founder and owner of Bartley Financial, grew up working many hours at his family’s restaurant. He saved the money he earned and started to invest.

The more time Robert spent managing his investments, the more convinced he became that there had to be a better way to manage his personal and family business’ finances. The CPAs and data silos headed by separate financial, insurance, and law professionals allowed too many chances for gaps in strategy and missed opportunities. 

Robert craved comprehensive personal and business financial planning services that promoted a coordinated effort among the many professionals it takes to run a smooth business. Being the roll up your sleeves, detailed person he is, Robert went to school and pursued the professional designations of CPA (Certified Public Accountant) and CFP® (Certified Financial Planner®).

Now, Robert uses his personal business experience and financial acumen to guide other business owners in Massachusetts, New Hampshire, and elsewhere toward their most successful futures. The Bartley Financial team coordinates your business and personal goals and, in the process, enhances your business’ attractiveness to employees when you need to hire and buyers when you want to sell. 

Bartley Financial’s fee-only structure ensures that your costs are forecastable and unencumbered by commissions or other hidden, fluctuating, and unpredictable charges. 

If you’re looking for a fiduciary financial advisor who can guide you through the complicated process of succession and estate planning together, contact Bartley Financial today.