Business owners will go to great lengths to put policies and procedures in place to ensure day-to-day operations run smoothly. They see the value of having standardized processes to prevent variation in methods. These same owners will develop three to five-year plans to prepare and sustain growth in their businesses.

However, many procrastinate developing an exit strategy. As key players, owners, and stakeholders, we all want to believe we are somewhat indispensable, a critical lifeline to the enterprise. But that dependency can create a weakness and vulnerability in the organization.

In June 2016, U.S. Trust, part of Bank of America, released a survey which sampled a group of 640 millionaire business owners with at least $3 million in investable assets. The report stated, “A large number of business owners have not articulated a strategy for ensuring the highest possible valuation of the business or its continuity beyond the current owner.”

The study found that nearly two-thirds of business owners do not have a succession plan, which could include either a sale or transfer of the company. 

Additional findings from the survey include the fact that younger millennial business owners are more likely to have succession plans than Baby Boomer owners, and women are more likely to have them than men. That’s alarming considering Baby Boomers are turning 65 at a rate of 10,000 a day.

It takes great bravery to think about what’s next: how do I prepare for such a transition?

But failing to do so could be considered selfish with negative implications to clients, employees, and families.

After 49 years in industry, I believe everyone in my situation should have a transition plan to exit the organization. An exit strategy ensures continuity of care for the customer, employees, and the owners’ family.

Rather than sharing the conceptual elements as to how it should be done, I will explain how I set mine up. It started years ago.

First, I had attempted to engage several family members years ago without luck. Hiring a family member strictly as a favor is not a good reason to give someone a job. The intent was to make them part of the succession plan for a variety of reasons, as many do. Nepotism doesn’t guarantee competence or loyalty. Blood doesn’t equal competency — just loyalty.

Besides, in a study of 1,600 family-run businesses conducted by the consultancy PriceWaterhouseCoopers, only 36% of the family businesses surveyed survived passage into the second generation, and only 19% of businesses surviving into the third generation, and a mere 7% continuing into the fourth generation.