Guest posting from Cindy Reid, Ready For Next (RFN) Advisory Services
Most business owners pour their heart, soul, and countless hours into building their companies. Yet when it comes to planning for the future of these businesses, the statistics tell a troubling story.
The Planning Gap
Did you know that only 16% of small to mid-sized businesses have any kind of transition plan in place? This means that 84% of business owners are operating without a roadmap for one of the most significant financial events of their lives: the eventual transition of their business.
For family businesses, the numbers are equally concerning. Only 30% successfully transition to the second generation, and by the third generation, that number plummets to just 12%. Family businesses represent the backbone of our economy, yet without proper planning, their legacies often disappear within a generation or two.
The Five Ds No One Wants to Talk About
Most business owners prefer to focus on growth, operations, and day-to-day challenges—and understandably so. However, this focus often comes at the expense of planning for unexpected events with the power to derail everything they’ve built. Specifically, most businesses lack contingency plans for what professionals call “the five Ds”:
· Death: What happens to your business if you suddenly pass away?
· Disability: If you’re unable to work due to illness or injury, who steps in?
· Divorce: How would marital dissolution affect business ownership and operations?
· Disagreement: What systems are in place to resolve serious conflicts between partners or key stakeholders?
· Distress: If your business faces financial hardship or industry disruption, what’s your lifeline?
Why Planning Matters Now
The reality is these events don’t just happen to “other businesses.” They’re common occurrences that affect companies of all sizes across all industries. Without proper planning, any one of these situations can force a business into crisis mode, often resulting in hasty decisions, significant value loss or even complete closure.
Planning isn’t just about preparing for negative outcomes—it’s about creating options for yourself, protecting what you’ve built and ensuring your business can continue to thrive regardless of circumstances.
“…it’s really difficult to transition a business, and I think that’s why a lot of people don’t do it. They just don’t know where to start. They don’t know what they don’t know, but the reality is that you can either attempt to take control of the process, or the process will just happen without you,” according to Cindy Reid. “Regardless of the complexity of the goal, I believe having a plan is key to achieving it.”
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Note: this was written without the aid of Artificial Intelligence (AI)
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