Only 35% of small business owners have a formal succession plan in place, yet 59% of potential successors—adults with a close family member who owns a small business—believe a plan probably or definitely exists, according to a May survey by financial technology firm Revenued. This 24-point gap, which the company calls a “perception gap,” suggests many future owners are operating under false assumptions, reducing the likelihood they will initiate planning discussions.
The findings, based on parallel surveys of 130 owners and 274 potential successors, highlight a critical communication breakdown that financial advisors must address. As the $84 trillion wealth transfer accelerates, advisors are increasingly urging business-owner clients to begin succession planning years before an exit, emphasizing that successful transitions require more than financial preparation—they must navigate family expectations, legacy concerns, and long-term business continuity.
Beyond formal planning, the survey reveals deeper communication gaps. Fourteen percent of owners believe a family member wants to take over the business despite never directly asking, while 35% of potential successors said no meaningful conversation about the company’s future has occurred. This disconnect reflects a broader trend of owners reconsidering who will eventually take over their companies.
Younger owners face particular challenges. Among owners under age 45—who made up 51% of the sample—38% said their planned exit has shifted later compared to three years ago, the highest rate of any age group. This suggests that even when owners are aware of the need for planning, external factors or internal reluctance are delaying action.
Time in business does not necessarily translate into readiness. Owners operating for more than a decade were the least likely to have identified a successor, with just 29% doing so. In contrast, owners in their sixth through tenth year had the highest rate of successor identification, at 39%. This pattern may reflect complacency among longer-tenured owners or a lack of urgency.
Financial barriers remain a significant obstacle. More than half of owners in the food service and transportation industries said financial factors have significantly or somewhat limited their ability to exit. Notably, awareness of financing options designed for business transitions did not correlate with better preparation—owners familiar with those options were no more likely to have a successor funded and ready.
The emotional divide between owners and successors adds another layer of complexity. Owners often worry about losing their daily purpose and structure after leaving their business, while potential successors are more likely to view taking over as an obligation rather than an opportunity. This difference in perspective may be a key reason why succession conversations fail to begin.
For advisors, these findings underscore the need to facilitate structured, early conversations that address both financial and emotional dimensions. As financial literacy for heirs begins before estate planning, advisors can play a pivotal role in bridging the perception gap and ensuring that succession plans are not just assumed, but actively built.
