The Great Exit Crisis: The Succession Planning Gap in Small Business

Why are so many small business owners stalling regarding succession planning? It’s the conversation many small business owners avoid—too often, until it’s too late. Whether out of denial, distraction or sheer emotional weight, many entrepreneurs delay planning for their exit, only to find themselves blindsided when life, market forces or opportunity come calling. The following scenarios are common and looming threats to many business owners today. They can all also be avoided by holding planning meetings, difficult discussions and collaboration between business and personal financial wealth management: 

• A potential buyer approaches the business. With no plan in place and no sense of the family’s plan for the business’s next stage, the owner either sells in haste, stays involved while witnessing an overhaul or skips on the deal, missing out on a potential cash windfall.
• A business owner passed away suddenly without a contingency plan, leaving employees and clients in limbo and forcing the family to liquidate at a loss.
• A long-time business owner assumes their children will take over company leadership. Too late, they discovered that none of the next generation was interested or prepared.
• A successful entrepreneur sold the business without financial planning and struggled to sustain their lifestyle post-sale, leading to personal and financial stress.

The Great Wealth Transfer expects nearly $124 trillion in generational wealth to be transferred to spouses, children and grandchildren over the next 20 years. According to some projections, wealth transferred through 2048 will total $124 trillion; about $105 trillion is expected to flow to heirs (about $18 trillion will go to charity). A significant portion of this wealth transfer will include business assets: The Great Ownership Transfer.  

Why does this matter to small business owners? Nearly half (42 percent) of small businesses (revenues $100K-$25 million) plan to transition the ownership of their company in the next five years. Of these, over a quarter (28 percent) plan to sell or transfer to someone in their family. (Barlow Research)

When Identity and Enterprise Collide

Many business owners struggle to separate their personal identity from the company they built, making the idea of stepping away feel like erasing a part of themselves. This emotional entanglement often leads to anxiety about the future. They may fear losing their purpose post-sale. Tactically, they may not know how to manage personal finances and cash flow without business revenue or income. Without a clear vision for what comes next, many are left wondering how to fill their time or find meaning once the business is no longer theirs.

Part of the solution comes from deep discussions as a family, talking about financials and the reality of spending habits. Questions about making life meaningful without working all hours of the day (and night, likely) will be asked. Will the sale of a business fund the same type of lifestyle for all remaining years of life, or will money be tight, requiring supplemental income? Many of these discussions will circle around the next generation: what will they do with their career, whether they join the business or not? 

Heir Today, Gone Tomorrow

Many business owners delay succession planning not because they lack the resources, but because they underestimate the complexity of what is at stake. Imagine a business owner working 16-hour days in their 70s. An unexpected shift in health can lead to a major business fallout if there’s no plan or transfer of knowledge for running the business day-to-day. Too often, there’s no formal plan, no clear successor and no honest conversation with family members or long-term employees—leading to rushed decisions or fire sales when it’s too late to course-correct.

Family dynamics can be especially volatile. Whose voice rises up as second-in-command? Siblings fight about the smallest problems from a young age. Add in hundreds of thousands or millions of dollars and an entire career, and it’s a potential recipe for a group of grown adults at one another’s throats. These aren’t just financial decisions—they’re emotional ones, and without early, open dialogue, even the most successful businesses can become battlegrounds.

Normalizing the Exit: A Case for Planning Early

Succession planning needs to be reframed—not as a distant, uncomfortable task, but as a natural part of a business owner’s financial journey. That means normalizing exit conversations early, well before retirement is on the horizon, and treating emotional readiness with the same seriousness as tax strategy or valuation. Trusted advisors, especially those in banking and wealth management, play a critical role here. Smart advice from trusted bankers, accountants and lawyers will bring a truly personalized perspective to navigating this transition, whether it’s a few years or a few decades down the line. Planning provides not only tactical financial and legal tools but also critical clarity and confidence to make a decision and craft a plan. Whether it’s preparing for a liquidity event, managing post-sale lifestyle shifts or aligning family expectations, a strong succession plan can help business owners stay grounded in what matters most.

Mark Valentino is Head of Business Banking at Citizens, where he leads strategy and growth for commercial banking services nationwide. With nearly two decades of experience across finance and healthcare, he advises and invests in early-stage companies while helping entrepreneurs navigate growth, succession and long-term value creation.