You’ve spent years… maybe decades, building your business. Late nights, missed dinners, weekends sacrificed. You’ve survived recessions, made payroll during pandemics, and built something from nothing.
But someday, you won’t own this business anymore. Maybe that day is 20 years away. Maybe it’s a few months away. And if you haven’t prepared for that reality, you could lose the very thing you worked so hard to build.
Most small business owners avoid succession planning because it feels overwhelming, and they don’t want to think about it. It means facing mortality, having hard conversations with family, and admitting that maybe your kids don’t want the business after all.
We get it. At Patrick Accounting, we’ve worked with hundreds of business owners faced with this transition, and we’ve seen the good, the bad, and the irreversible.
A lot of business owners think succession planning is about retirement. What they don’t realize is that it’s actually about creating a business that gives you options.
In this article, you’ll learn:
- Why waiting too long to start planning can destroy your business’s value
- What makes a business actually sellable (and what doesn’t)
- How to identify the gap between what you think your business is worth vs. what buyers see
- What steps you can take today (even if you have no plans to sell) to protect your future
Why Business Owners Avoid Succession Planning
Succession planning isn’t fun. It forces you to face uncomfortable truths. Understandably, most business owners would rather focus on the day-to-day work that feels more immediate.
But avoiding the topic doesn’t make the issue go away. It just makes it harder (and more expensive) later.
We hear things like this all the time:
- “I’m not ready to retire yet.”
- “Maybe my son will want the business someday.
- “Business is good. I’ll figure this out when the time comes.”
The thing is, succession planning has nothing to do with leaving. It's all about preparation.
When you start planning for your eventual exit, you begin making smarter decisions today:
- You build systems that don’t depend on you.
- You create processes someone else can follow.
- You develop a team that operates without your constant input.
Those decisions make your business both more valuable and more enjoyable to run right now.
Waiting too long means that if something unexpected happens, you’re unprepared. Things like health issues, a sudden offer, or a market shift. As a result, you can’t leave even if you want to, and you can’t sell even if you need to.
The Valuation Gap: What You Think Your Business Is Worth vs. Reality
Let’s say you assume your business is worth $5 million. Maybe you’ve done some napkin math or looked at average revenue multiples. But when you get a formal valuation, it comes back at $2 million. Or worse, $500,000.
That’s the valuation gap. And it’s one of the most painful realizations for business owners who’ve built their retirement around an inflated number.
We had a client who thought his business was worth about a million dollars. But after reviewing the financials, we had to tell him it wasn’t worth anything on the open market.
Here’s why:
- Every customer was a one-time project
- Nothing was documented
- The owner was central to every decision
- Equipment was worth around $250,000
From a buyer’s perspective, this wasn’t a business. It was just some used assets and a book of relationships tied to one person.
Buyers pay for predictability, not potential. They want:
- Recurring revenue
- Documented systems
- A team that can execute without the owner
- Steady cash flow they can rely on
If your business doesn’t have these, the valuation gap is real. And it’s painful. But the sooner you face it, the sooner you can fix it.
Why Businesses That Rely Soleyl on Their Owner Are Worth Less
If you're a business owner and you disappeared tomorrow, how long would your business keep running? A week? A month? Not at all?
If the answer is “not long,” then what you really have is a job, not a business. And jobs don’t sell.
This is the owner dependency trap, and it kills value.
We see situations like these all the time:
- The dentist who does all the procedures
- The architect who’s the only licensed staff member
- The attorney who manages every client case personally
If you are the business, there’s no value to transfer. A buyer would have to replace you just to maintain performance, and most won’t take that risk.
Now, contrast that with a business where the owner handles strategy while others deliver the work. That business can run and grow without the founder. That’s what buyers are looking for.
If your business relies completely on you, it isn’t really a business. And it’s time to change that.
Why Family Business Succession Requires Honest Conversations
If you're hoping to pass your business to family, you need to ask them a hard question early:
Do they actually want it?
Not: “Wouldn’t it be great if…”
Not: “They’d be good at it.”
But honestly: Do they want this business?
We’ve seen too many owners spend decades assuming their kids would take over only to hear, “This isn’t what I want” far too late. At that point, there's no succession plan, and there's far less time to figure out an alternative.
Or a worse scenario: The family member feels obligated, takes over out of guilt, and ends up resenting the business.
That’s why these conversations need to happen early. And if the answer is “I’m not sure,” that’s okay. But you need to build value with contingencies in mind, even if you hope to pass it down.
Three Things That Make a Business Sellable
When evaluating a business for succession, buyers are looking for three things:
1. Documented Systems and Processes
If all your operational knowledge is in your head, your business isn’t transferable. Buyers want to see how you acquire customers, deliver your service, and solve common problems. And they want to see it on paper.
2. Independence from the Owner
Revenue that relies on your personal relationships is risky. If you left, would clients follow? If the answer is yes, you need to create systems and a team that can run without you.
3. Predictable, Recurring Revenue
Retainers, service contracts, and memberships create steady income. One-time jobs do not. The more predictable your cash flow, the more valuable your business.
If you want to sell your business someday, build it as if you’re selling tomorrow.
When Should You Start Succession Planning?
If you haven’t already started, the best answer is right now. Not when you're close to retirement. Not when a buyer comes knocking. And not after a crisis.
Succession planning is a long-term strategy.
Start by getting a formal valuation, even if you aren’t selling next year. You need one now because you need to know:
- How much your business is really worth
- Where your biggest risks are
- What to improve to increase value
Then, use that valuation as a scorecard. Revisit it every few years to track progress.
Even if you never sell, these are the steps you need to take. With systems in place and a team you trust, you can step back, take a vacation, or respond to emergencies without everything falling apart.
Succession planning gives you control every step along the way.
Why Profit Today Builds Exit Value for Tomorrow
Improving profitability goes beyond putting money in your pocket today. It directly increases your business’s future value.
Most small businesses are valued based on profit (or EBITDA). So, if you increase profit from $200,000 to $400,000, and your industry sells at 3x earnings, you just added $600,000 to your business’s value.
At Patrick Accounting, we use the Profit First framework to help clients:
- Streamline expenses
- Improve pricing strategy
- Create efficiency through systems
- Reduce reliance on the owner
Each of these levers drives profit and succession value. You don’t have to choose between today’s income and tomorrow’s opportunity.
You Can't Afford to Keep Pushing Succession Planning Off
We know succession planning is uncomfortable. But the owners who face it early build real wealth and real options. The ones who avoid it end up stuck, stressed, and scrambling when it’s too late.
You’ve worked too hard to let poor planning destroy your legacy.
Here's what you need to do next:
- Get a valuation. And do it now.
- Have the hard conversations. With family, employees, and potential buyers.
- Start building like you’re selling tomorrow. Even if you plan to own it for 20 more years.
Succession planning gives you the power to choose your future, whether that means selling your business, passing it to someone you trust, or stepping away when life calls for it.
At Patrick Accounting, we help business owners understand what their business is really worth, what’s driving that value, and how to improve it.
Let's talk about how to make sure you're ready.
Your business shouldn’t be a trap.
It should be the best asset you’ve ever built.
