Most owners of small or moderate size firms in the US aren't yet planning for stepping away from the wheel.

A survey of 502 US small- and medium-sized firms in the US shows that three in five of them don’t have a succession plan in place, suggesting wealth management professionals have a potentially large market to pursue as and when business owners do eventually have to confront the change.

The Small Business Survey, carried out by Nationwide and using a Harris Poll survey, found that among 47 per cent of firms without a succession plan, owners thought this wasn’t necessary. Other reasons for no plan include not wishing to quit work (14 per cent); not knowing when to create a plan (11 per cent) or whom to work with (11 per cent). Other reasons for no plan were not having time to draw one up, and being overwhelmed by government red tape.

“Business owners function at such a rapid pace to remain competitive, it’s no wonder that developing their exit plan and replacement doesn’t seem like today’s priority,” Kirt Walker, president & COO of Nationwide Financial, said. “Yet, there isn’t a more critical component of an operational plan than a solid business succession plan for providing seamless continuity in a time of crisis or transition,” Walker continued. 

Trends show that many older business owners continuing to work later in life, and as a result they postpone succession planning until closer to their retirement. However, this delay in planning doesn’t enable the business to be adequately prepared for the unexpected, such as disability or loss of a leader, Nationwide said.

Younger business owners appear to have a better grasp on the importance of succession planning. According to the survey, Millennial business owners are most likely to currently have a business succession plan in place (61 per cent) in comparison with Baby Boomer (32 per cent) and GenX (32 per cent) leaders.