It takes time and careful preparation to put a succession plan into place.
But in a new survey of 250 business owners by Bank of America’s Merrill Lynch division, only 39% said they used an expert—like a management consultant, financial adviser or commercial banker—to develop a succession plan.
While 60% believe their business will continue to be successful after they retire, only 35% said they would be confident in their personal wealth management strategy if they stopped running their business today. And 33% have not consulted an expert to prepare their personal finances for when they will no longer run their business.
“The best succession planning strategies evolve and require frequent evaluation. A transfer of ownership or management could happen on a timeline as planned, or come as a result of sudden or unforeseen circumstances,” said John Thiel, head of Merrill Lynch Wealth Management.
When asked who they would trust to take their place if forced to stop running their business, 51% said a current employee and 24% chose a family member. Only 21% would hire someone from outside their business. Their biggest concerns of the takeover were financial management (23%), leadership succession (20%) and business growth (16%).
“It is important that business owners are prepared for a variety of situations, not only so their business can seamlessly continue running after a transition, but also so their personal finances can continue to support their financial and life goals,” Thiel said.