Looking to the Future: Succession Planning

“What comes next?” This is a question we often get at PED’s Business Advisory Centre relating to where people go with and grow with their business. With the last of the baby boomers now over 50, what does retirement look like for an entrepreneur? We asked Business Advisory Centre sponsor, Michael Konopaski of Inclusive Advisory for some insight into Succession Planning for family business owners.

Article by: Michael Konopaski, PhD, CPA, CMA, CFP

Succession Planning in Local Family Business

Several generations ago, business meant family business. For hundreds of years, older family members have transferred their business to their children and/or grandchildren. Intergenerational transition is a necessary condition for the long-term sustainability of family businesses. Involving children in the business offers a new beginning and an opportunity for change. Succession in a family business involves a lengthy, almost lifelong period of development. Young children learn the values encouraged by their parents. In reality, informal succession planning starts early in life. As children get older, succession requires attention from the perspectives of both the family and the business to understand the perspectives of the family members. The process of succession can be insignificant, disruptive, or rational depending on the context. In addition, the transitions are opportunities for change, not guarantees of improvement. The main issues having an impact on the succession process of businesses are the availability and competence of family members as successors.


Many transitions from one stage to the next follow the same basic pattern, beginning with increasing developmental pressure in the family business. Typically there is a defining moment in the life of the family business that sets the transition in motion. The critical event often supports a strategic move away from the old structure and requires the family business to explore alternative forms of ownership. Finally, the family business owners and managers must choose one of the alternatives and set the others aside. At the core of problematic succession lies an inappropriate relationship between the business’s past and its present. Other reasons successions fail include lack of planning, incompetent or unprepared successors, and family rivalries.


Local data reveals approximately 25% of family businesses have no evidence of any formal succession plans. Those that have succession plans in place can focus their efforts on the future, and those who were especially creative in their forward thinking can also consider how estate-planning goals could be coordinated with their succession plans. Since their investment in the family business is usually their most significant asset, there are a number of important estate-planning issues that they will eventually need to address. To accomplish this, there are many strategies they can use to plan for their estates such as life insurance, wills, family trusts and so forth.


Local data also reveals that approximately 50% of family businesses think that family and business means the same thing. For them, board meetings happen at the kitchen table and family discussions take place throughout the day in the workplace. This mindset can complicate the succession planning process. In these situations, family members do not really retire from the business any more than they would retire from their family. For them, family and business cannot be separated and there are countless examples of family businesses with 70 and 80 year-old family members still heavily involved in the business.


Finally, none of the data supports a “typical” succession planning timeline or trajectory. There are a growing number of family businesses where the younger generation are the founders and the parents have joined to provide assistance. In these cases, the younger generation are the experts, especially when it comes to innovation and technology. Further, with increased life expectancy, it is not uncommon to see three or four generations working simultaneously in the family business. Current succession planning trends appear to be more unconventional and unpredictable. In the future, traditional succession planning approaches may not be useful and accountants, bankers, lawyers and financial planners will need to have an open mind when advising entrepreneurial families.

BAC Sponsor, Inclusive Advisory, has created a new business model. They believe that accountants, lawyers and investment advisorys work better when they’re together in one space. It’s an innovative, team-based approach to financial advisory. It’s inclusive. Better together.

Services offered by Inclusive Advisory include:

  • Accounting: audit, financial reporting, tax, succession planning
  • Law: business law, real estate, wills & estates
  • Wealth Management: investments, life and disability insurance, mortgages