Having devoted a good chunk of their lives to building a business from scratch, some founders are reluctant to face the fact that they will eventually have to hand over the reins if their companies are to go on without them. Others may be loath to make certain hard choices, such as whether to pick a grown child or a long-time employee who is not related as their successor.
"If a business owner and his advisors do a really good job with succession planning, they may determine that the most-qualified successor is not a blood relative," said Martin Durbin, a certified public accountant and president of Gateway Financial Designs.
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Given the complex issues involved, succession planning can be very time-consuming. In some cases, it can take a year for a business owner to draft and begin to implement a succession plan.
Small-business owners tend to be very busy people, and many figure they don't have the time to address certain long-range issues. Others balk at the notion of paying thousands of dollars in fees to financial advisors, lawyers, accountants and other professionals.
But the absence of a succession plan leaves a lot to chance. Squabbles between the heirs of a deceased owner, or between heirs and employees, can sink a business.