Bud was proud of the successful business he started 40 years ago. From his initial small store, he had expanded to several locations around the state, with loyal employees, vendors and customers.
Everything changed when he died unexpectedly. Bud, a composite of several entrepreneurs whose next of kin declined to discuss the business publicly, always assumed one of his children would take over, but he never put a plan in place or even talked about it.
Chaos ensues when family members clash over the leadership and direction of the businesses. Daily life can disintegrate into battlefields of bruised feelings and bitter arguments.
Family feuds kill businesses
Often, as disagreements escalate into legal disputes, rudderless businesses have to be liquidated, leaving shattered families with tarnished reputations and meager assets.
Versions of this unfortunate scenario play out at small businesses every day. Owners who have the vision and perseverance to transform an idea into a successful enterprise are often so passionate about their creation that pragmatism becomes clouded. They can be unreceptive to a future for the business that does not include their steady hand.
But such lack of foresight goes far beyond the demise of a corner bakery or modest factory. The Small Business Association says businesses with fewer than 500 employees — its definition of small businesses — account for 99.9% of all firms in the U.S., 43.5% of the country’s total economic output and just under two-thirds of new jobs created.
Well-defined succession plans thus contribute not only to the continued success of individual companies but also to a more robust economy for us all.
Safeguard the enterprise
“A common misconception among small business owners is that succession planning is only necessary for larger corporations,” says Dana Ronald, president of Tax Crisis Institute. This is not the case, he says — smaller enterprises are actually more vulnerable to sudden changes in leadership.
