For over 75 years, HORAN Wealth has helped business leaders and their families build, grow, and protect their wealth. Through decades of experience, we've found that most business owners have two recurring challenges:
- Business owners are too busy running their companies to focus on long-term succession planning.
- Business owners often do not realize the significant wealth they have accumulated in their business—and what that means for their family and their future.
The problem? Without a clear succession plan, all that hard work may not translate into lasting value.
- Most family-owned businesses don't survive long-term. Only 40% make it to the second generation, and a mere 13% last to the third (Benchmark International September 7, 2022).
- While 72% of business owners want to pass their company to family, only 34% have a formal succession plan to do so (PwC, May 15, 2023).
Why Business Succession Can't Wait
You've built something remarkable—providing for yourself, your family, and your employees. But what happens if you are suddenly unable to lead? A lack of planning can lead to:
- Leadership Disruptions: Instability affecting employees, customers, and key stakeholders.
- Family Disputes: Conflicts over ownership, roles, and financial fairness.
- Under-Valued Sales: Hasty decisions leading to sales below true market value.
We know how busy you are. So, we created this simple plan of the four pillars you need to build a strong and sustaining succession plan to protect your business, your employees, and your family.
Four Pillars of a Strong Succession Plan
1. Next-Gen Ownership Plan: Deciding who will own and control your business is one of the most critical succession planning decisions. Make this decision early to ensure a smooth and strategic transition.
Your Upside: Proactively deciding on ownership can safeguard and even enhance your company's legacy and financial future, ensuring a seamless transition that protects business value.
The Downside: Without a clear plan, ownership transitions can become chaotic, undervalued, and legally complex—jeopardizing everything you have built (PwC Family Business Report 2023, May 16, 2023).
Three Tips for Success:
- Start Early: Initiate succession discussions well before retirement.
- Involve Family: Engage family members in open conversations about future roles.
- Seek Expertise: Consult legal and financial advisors to formalize plans.
2. Management Team Strategy: A strong business is built on leadership. Even if ownership is transferred smoothly, an unprepared or misaligned leadership team can weaken long-term success. Ensuring the next generation of leaders is ready can make all the difference.
Your Upside: A well-prepared leadership team provides stability, maintains business continuity, and ensures employees, clients, and stakeholders remain confident in the company's future.
The Downside: Even the best succession plan can falter if your key management team isn't ready to step up, leading to uncertainty, talent gaps, and potential business decline (Harvard Business Review, September 13, 2022).
Three Tips for Success:
- Identify Leaders: Recognize and mentor potential internal successors.
- Provide Training: Invest in leadership development programs.
- Establish Clear Roles: Define responsibilities to ensure a smooth transition.
3. Accurate Business Valuation: Knowing your company's true value is essential for succession planning, whether selling the business, transferring ownership, or securing financing.
Your Upside: Regular valuations ensure your company's worth is accurately represented, preventing financial losses and positioning you for stronger negotiations during sales, buyouts, or partnerships (Forbes, September 22, 2023).
The Downside: Without an accurate valuation, you risk leaving money on the table or setting unrealistic expectations, making transitions more difficult—especially in the case of unexpected exits (U.S. Small Business Administration, April 16, 2024).
Three Tips for Success:
- Schedule Regular Appraisals: Keep valuations current with market trends.
- Document Financials: Maintain transparent and detailed financial records.
- Consult Professionals: Engage valuation experts for unbiased assessments.
4. Smart Estate Planning: Many business owners focus on the company's future but overlook how their personal wealth will be handled. Without a proper estate plan, significant portions of wealth could be lost to taxes or family disputes.
Your Upside: A well-structured estate plan ensures your wealth benefits those you care about most, protects your business interests, and minimizes tax liabilities for your heirs.
The Downside: Neglecting estate planning can expose your personal assets to unnecessary taxes, legal battles, or unintended heirs, potentially disrupting both your business and your family's financial future (Wealth Management, February 16, 2023).
Three Tips for Success:
- Draft a Will: Clearly outline the distribution of your assets.
- Establish Trusts: Protect assets and manage tax implications effectively.
- Review Regularly: Update estate plans to reflect life changes and new laws.
Your Business Deserves a Future as Strong as Its Past
Let's build that future together. For over 75 years, HORAN Wealth has helped business owners protect their legacy, optimize their wealth, and ensure their families thrive.
Start your succession plan today—connect with our team now.
With our Private Wealth services at HORAN Wealth, we help high and ultra-high-net-worth investors, businesses, and families navigate their wealth journey to live abundantly and build a legacy for generations.
HORAN Wealth is the marketing name of HORAN Securities, Inc. (“HSI”) and HORAN Capital Advisors, LLC (“HCA”). Securities offered through HSI, a dually registered investment firm, member FINRA | SIPC. HORAN Wealth Management (“HWM”) is the associated investment advisory firm. HCA is an affiliated investment advisory firm.
The information herein has been obtained from sources believed to be reliable but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results. Market conditions can vary widely over time and there is always the potential of losing money when investing in securities. HORAN Wealth and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.