Succession Slip-Ups: What Trips Up Business Owners Every Time
“A great succession plan makes your business stronger. A bad one makes your exit harder—and more expensive.”
Succession planning is often positioned as a smooth, logical process. Identify your replacement. Train them. Step away. Celebrate.
But in real life, the process is messier—riddled with blind spots, bad timing, and emotional decisions. These missteps can cost a business its value, disrupt operations, damage culture, and, in some cases, lead to total collapse.
As someone who has worked with hundreds of business owners preparing for succession or sale, I’ve seen what actually trips them up—and how to avoid it.
Below are seven of the most common succession planning mistakes owners make and the lessons you can use to avoid them.
1. The Hero Complex: “Nobody Can Replace Me”
Many owners build companies where every critical decision must pass through them. They handle sales, manage key clients, approve every hire, and write the checks.
This feels like control. In reality, it’s risk.
Buyers call this “owner dependence.” And they hate it.
Even if you plan to hand off to a family member or internal successor, this dynamic makes for a shaky transition. If you remove the owner and the business falters, value disappears.
Warning Signs:
You can’t take a two-week vacation without putting out fires remotely.
Your name is on every major client relationship.
Employees defer decisions because “you know best.”
What to Do Instead:
Start by delegating day-to-day decisions.
Shift relationships to teams, not individuals.
Track how many decisions flow through you each week and aim to reduce that by 50% annually.
2. Successor ≠ Successor-Ready
One of the most common traps? Choosing your successor too early—especially if they’re a loyal #2 or a family member.
Emotional loyalty is not a qualification for executive leadership.
Yet time and again, owners anoint successors based on tenure or convenience, not leadership capacity. When that person isn’t ready—or doesn’t want the job—chaos ensues.
Case Study: A client appointed his son as successor without checking his interest. When the transition started, the son confessed: “I never wanted this business. I just didn’t want to disappoint you.”
What to Do Instead:
Conduct a leadership gap analysis.
Define what skills, qualities, and experience your future CEO needs.
Provide structured training and outside coaching, and check for interest early and often.
3. “It’s All in My Head” Syndrome
If your succession plan lives in your mind, it doesn’t exist.
An informal plan—no matter how thoughtful—won’t guide your team in a crisis. It won’t reassure buyers. And it certainly won’t hold anyone accountable.
A written succession plan should include:
A timeline
Identified successor(s)
Training and development steps
Legal documents and compensation changes
Contingency planning
Without documentation:
Successors won’t know when or how they take over.
Key employees may panic and leave.
Buyers may walk away.
What to Do Instead: Put the entire plan on paper. Treat it like any other strategic document—build it, review it, revise it annually.
4. Silent Strategy: Failing to Communicate the Plan
Another common slip-up? Keeping the succession plan a secret.
Some owners don’t want to trigger panic. Others want to keep options open. But silence breeds fear. And fear leads to misinformation, retention risk, and low morale.
When employees, clients, or partners sense something is changing but don’t know what—it destabilizes trust.
What to Communicate:
Why succession is happening
Who is stepping into leadership roles
What it means for employees and customers
What stays the same
What to Avoid:
Over-promising outcomes or titles
Vague “we’ll figure it out later” messages
Sudden announcements without a ramp-up
What to Do Instead: Roll out communication in phases. Share high-level plans early. Reassure employees that the business is growing, not crumbling.
5. Avoiding the Hard Conversations
Owners are often reluctant to tackle tough issues in succession planning:
“What if my successor fails?”
“What if my family members fight?”
“What if my exit timeline changes?”
Instead of addressing these risks head-on, they kick the can down the road—until something breaks.
This avoidance leads to:
Family conflict
Lawsuits
Failed transitions
Bitter resentments
What to Do Instead: Build contingency scenarios into your plan:
What happens if the chosen successor leaves or isn’t ready?
Who steps in during an emergency?
What if the market shifts and you delay your exit?
Document backup plans and have open, honest discussions—even if they’re uncomfortable.
6. Waiting Too Long to Start
Succession planning takes time. Lots of it.
Ideally, the process begins 3–5 years before your exit. But many owners wait until a health scare, a sudden burnout, or buyer inquiry forces them to rush.
Late planning = limited options.
And limited options = reduced value.
What happens when you delay?
You can’t groom a successor in time.
Buyers lower their offers due to risk.
You’re forced to stay involved longer than you wanted.
What to Do Instead: Begin early—even if your exit is 5–10 years away. Think of succession as business continuity, not just a transition.
Start with a basic roadmap and refine it each year.
7. Confusing Ownership Transfer with Leadership Transfer
Ownership and leadership are different things—and require different plans.
You can pass equity to a child or employee. But that doesn’t mean they can lead the business.
Or, you can sell 100% of the business, but still play a role as an advisor or chairperson.
Many succession failures stem from assuming ownership = readiness.
What to Do Instead:
Separate the leadership track from the ownership track.
Train your successor in management and decision-making long before equity changes hands.
Use transitional roles like President or COO to build experience before making them CEO or majority owner.
What These Mistakes Cost You
Succession mistakes aren’t just annoying—they’re expensive.
Here’s what you risk when your plan fails:
A 25–50% drop in valuation if the business is overly dependent on the owner.
Employee turnover if trust erodes or leadership is unclear.
Legal costs from inheritance disputes or partnership dissolutions.
Delayed retirement as you’re pulled back into operations.
Lost legacy, as the business you built erodes under poor leadership or no plan at all.
What Successful Succession Looks Like
The best succession plans are those that:
✅ Start early
✅ Identify AND prepare successors
✅ Reduce owner dependence
✅ Are fully documented
✅ Communicate with clarity
✅ Plan for contingencies
✅ Evolve as the business does
This approach doesn’t just prepare your business for your exit—it makes your company stronger today.
The Bottom Line: You’re Building Optionality
Succession planning is about options.
It creates flexibility for:
When you want to exit
How you want to exit
Who will run the business
Whether you sell, gift, or transition internally
Without a plan, your only option is to keep working—or walk away with less than you deserve.
Take Action: Where Are You Today?
Here are 5 quick questions to assess your current succession readiness:
Do you have a written succession plan?
Can your business run without you for 30+ days?
Have you identified AND developed your successor?
Do employees know what’s coming?
Is your personal wealth tied up in your business exit?
If you answered “no” to 2 or more, it’s time to make succession planning a strategic priority.
Need Help Getting Started?
Succession planning can be overwhelming. But you don’t have to do it alone.
I work with owners just like you to:
Assess business continuity risk
Create transition roadmaps
Prepare successors
Protect business value
Secure personal wealth
Let’s have a confidential conversation. Even if your exit is years away, the right time to start is today.