Top 3 Factors That Stall Succession Planning in Family Businesses

September 28, 2022 by Interchange Capital Partners

By Brian Baum, CEPA®, CFP®

Running a family business is more than a job—it’s a lifetime of effort, strategy, and commitment. But when it comes to planning for what happens next, many business owners put succession on the back burner. As business consultants, we see this all the time. Owners are busy leading their companies, focused on growth and operations, while succession planning remains an abstract “future” problem.

At Interchange Capital Partners, we specialize in helping family businesses navigate the complexities of ownership transitions—whether passing the reins to the next generation or preparing for an external sale. Succession is not just about the transfer of leadership; it’s about preserving the integrity of the business, protecting family harmony, and maintaining financial stability.

Here are three of the most common obstacles that stall succession planning—and what business owners can do about them.

1. Business Is Booming

Why make changes when business is flourishing? The idea of future potential business growth is more exciting—and more important—than working on a succession plan, right? Wrong. We can’t predict the future, but we have seen this movie before. What if a health issue or other factor leads to the unexpected departure of a key person or owner? 

We understand working on the day-to-day is important, and you want to be as successful as you can, thereby choosing to spend time on business-growth initiatives while pushing off the future transition. But should something happen to you, you need to ensure you’ve left a clear plan (with solid direction and written wishes) in your stead.

At Interchange Capital Partners, we use a 3 Phase process for business exit planning. It includes: identify and quantify, maximize and protect, and transition and transact. The goal is to maximize the value of your business, mitigate the taxes, make sure you have enough cash to live your life, and keep you in control until you are ready to hand over the reins. 

2. Stuck in the Day-to-Day

Do you feel like your plate is filled with running the business and you don’t have the time to create a succession plan? You’re not alone. Many business owners fall victim to the rolling 3-to-5-year exit plan. They may be telling others their exit will be 3 to 5 years from now, but time keeps passing and year after year nothing changes until you find yourself 10 years down the road and no closer to your transition goal. 

However, you can still work toward the succession and create a longer transition period if you choose. It might make more sense to work backward by asking yourself:

• Who is the ideal candidate to take over the business?

• When do I want to be out?

• How long will it take to complete the transition?

3. Hesitant to Make an Exit

Financial Concerns

Oftentimes, you may find that as a business owner, you have too much personal wealth tied to the business. In this case, the business itself might not have enough value to sustain the owner’s lifestyle after retirement. That is why it’s important to start succession planning early so you’re not caught off guard by the long-term costs of retiring. In short? Make sure the business can operate without you, and you without it.

Gradual Succession

Maybe you have held off on initiating certain business strategies, potentially making it more difficult for the next owner to succeed. Now would be the time to delegate tasks and initiatives to other employees or family members that you see as being a good fit. This allows the next generation of leadership to show their capabilities with your oversight. This will give you more comfort before withdrawing from the business.

A Business Consultant’s Role in Succession Planning

Every family business faces unique challenges when it comes to ownership transitions. At Interchange Capital Partners, we work as business consultants to help family-owned enterprises think through the complexities of succession, ownership, and leadership transitions.

Succession planning isn’t just about who takes over—it’s about aligning personal, family, and business priorities in a way that makes sense for everyone involved. We guide business owners through a structured consulting process that brings clarity to these decisions, helping them navigate the known and unknown factors that impact their future.

If you're ready to start the conversation, reach out to us at team@interchangecp.com or call 412-307-4230 to schedule an introductory appointment. Let’s explore how thoughtful business consulting can support your family, your business, and your long-term vision.

About Brian

Brian Baum is the CEO & President of Interchange Capital Partners, where he leads the development of innovative strategies tailored to the unique needs of private and multi-generational companies. Early in his career, Brian conducted over 1,000 interviews with CEOs, Presidents, and Chairmen of privately held companies, uncovering a critical insight: the larger the company, the more likely the owners were to struggle with complex family, business, and ownership dynamics. Even more striking was the realization that many of these business leaders were unaware of these complexities and the sophisticated level of advice needed to effectively navigate them.

Armed with this understanding, Brian has been instrumental in reshaping Interchange’s focus, aligning its services with the lifecycle of generational transitions. His approach provides owners with expert guidance through the critical phases before, during, and after an ownership change, addressing both the immediate needs and the long-term vision of the business and family. Under Brian’s leadership, Interchange has become a leading resource for business owners seeking to solve intricate challenges and create lasting value.

Brian's vision extends beyond traditional financial advice; he positions Interchange as a family business advisory firm, recognizing the interconnectedness of family and business in creating enduring success. His leadership is not only about working to optimize financial outcomes but also about enhancing the overall well-being of the families he serves. Interchange’s work involves coordinating all aspects of a family's financial, business, and ownership strategies, akin to managing an outsourced family office, ensuring that no aspect is overlooked.

Brian’s educational background includes a Bachelor of Arts from Penn State University, where he majored in Psychology and minored in Business. He is also a Certified Exit Planning Advisor (CEPA) and a CERTIFIED FINANCIAL PLANNER™ (CFP®).

Outside of work, Brian enjoys spending quality time with his wife, Natalie, and their two daughters, Quinn and Blair. He is an avid golfer and enjoys the occasional scotch and cigar. To learn more about Brian, connect with him on LinkedIn.

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