Most owners we meet have spent twenty or thirty years building a company and about twenty minutes thinking about who will run it next. That is not a criticism. When you are making payroll, chasing receivables, and keeping customers happy, the day you step away always feels like a problem for later. But later has a way of arriving all at once: a health scare, a buyer who calls out of the blue, a son or daughter who finally asks, “So what’s the plan?”
A good succession takes about five years to do right. Not because the paperwork is slow, but because people, numbers, and habits take time to change. Here is how we walk family businesses through it, step by step.
1. Decide what “done” looks like for you
Before anyone talks about valuations or trusts, sit down and answer three plain questions on paper:
- When do you want to stop working full time? Pick a year, even if it moves.
- How much do you need the business to pay you, in a lump sum or over time, to live the life you have planned?
- Who do you hope ends up owning it: family, key employees, a partner, or an outside buyer?
The answers often surprise owners. Many find that what they really want is not the highest price but a business that keeps its name, its people, and its customers. That changes the whole plan.
2. Get an honest number on the business
You cannot plan a hand-off without knowing what you are handing off. A proper valuation looks past the tax return to what the company actually earns for an owner, after you add back the personal vehicle, the family member on payroll, and the one-time expenses. It also looks at what a buyer would worry about: customer concentration, a key supplier, or the fact that every important relationship runs through you.
3. Build the bench before you need it
The next owner, whoever it is, needs to be ready before the keys change hands. For family successors, that means real responsibility now: owning a department, sitting in on banker meetings, signing off on hiring. For key employees, it may mean a path to buy in over time. Write down who handles what today, and who will handle it in three years. The gaps are your training plan.
4. Separate the family from the firm
Family businesses carry a special risk: what is fair is not always what is equal. One child works in the business every day; another lives in Austin and never has. Treating them the same on ownership can sink the company. Treating them differently without explaining why can sink the family. A written plan, sometimes with life insurance or other assets used to balance things out, keeps Thanksgiving dinner civil and the company healthy.
5. Settle the legal and tax structure early
How the business is held, as a corporation, an LLC, or a partnership, shapes how it can be transferred and what it will cost in taxes. Buy-sell agreements, gifting strategies, seller notes, and installment sales each have trade-offs. These are decisions to make with your attorney and CPA at the table, years before the sale, not weeks. Our tax and legal coordination exists to get those people working from the same plan.
6. Write it down, then work the plan
A succession plan that lives in your head is not a plan. Put it on paper: the timeline, the price or formula, how the buyer will pay, who takes over each responsibility, and what happens if something goes wrong. Then review it every year, the same way you review your insurance.
7. Step back in stages
The smoothest transitions we have seen happen gradually. The owner moves from running the business to advising it, from five days a week to three, from signing every check to reviewing a monthly report. Customers and employees get used to the new leadership while the founder is still around to answer questions. By the time the final papers are signed, the change has already happened.
The best time to plan your exit was the day you opened the doors. The second-best time is this year.
Where to start this month
- Write down your target year and the income you need.
- List every task that only you can do today.
- Have one honest conversation with the person you hope will take over.
- Ask your CPA what your business structure means for a future sale or transfer.
If you would like a second set of eyes, our Succession & Transition work starts with a free first meeting. We will sit down with you, and with your family if you like, and help you draw a plan everyone can stand on.
