Succession Planning Risks and How to Avoid Them
Dylan Gans
July 15, 2025 ⋅ 6 min read
If you’re like most small business owners, business succession planning isn’t your favorite topic. It’s not urgent—until it is. And it’s often tied up with tough emotions: Stepping back, letting go, or imagining life after your business. Whether you’re focused on future leaders or tackling leadership transitions, skipping the succession planning process can introduce significant risks.
However, skipping the planning stage can be costly. We’ve seen it happen too many times: The owner delays, the transition gets messy, and the business suffers. Poor succession planning can create leadership gaps, damage business operations, and harm company culture.
Succession planning doesn’t have to be complicated—but it does need to be thoughtful. A well-structured succession process helps identify high-potential employees, develop targeted development plans, and protect business continuity.
In this article, we’ll break down the most common succession planning risks business owners face when they put off or mishandle succession—and how to avoid them with a smart, structured approach.
Why Succession Planning Matters (Even If You're Not Ready to Retire)
Succession planning isn’t just about retirement. It’s about future-proofing your business and protecting its strategic direction. Whether you plan to sell, pass it to family, or promote internal candidates, having a clear plan safeguards the value of your business and ensures leadership continuity.
When you skip planning, you don’t just risk an uncertain future. You risk losing control of the business, damaging employee morale, and creating leadership voids that weaken organizational performance.
The Hidden Pitfalls of Waiting: 5 Succession Planning Risks Every Owner Should Know
You’ve built something valuable—maybe even irreplaceable. But without a thoughtful exit strategy, all that hard work is vulnerable.
Too many owners delay succession planning until they’re forced into it by burnout, illness, or unexpected change. That’s when mistakes happen: Deals fall apart, teams feel lost, and businesses lose value.
The truth? A strong succession plan isn’t just about the end—it’s about strengthening your business today. Below are five common succession planning challenges that can derail your transition if left unaddressed.
Risk #1: Waiting Too Long
The most common mistake? Thinking you have more time.
Many owners wait until a health issue, burnout, or a sudden life change forces them to act. Without long-term planning or developing succession plans early, business continuity suffers, and leadership changes become rushed and unprepared.
Start early to build a talent pipeline, develop internal talent, and ensure a smooth transition when the time comes.
Risk #2: Not Having a Clear Successor
Who’s taking over when you step aside? If you don’t identify potential successors or engage in leadership development, you risk creating confusion and internal conflict. Buyers, employees, and key stakeholders will seek clarity on leadership roles.
By intentionally developing succession candidates and providing career development opportunities, you can strengthen your future leadership team.
Risk #3: Failing to Communicate the Plan
Uncertainty breeds anxiety. Without clear communication, even effective succession planning can falter. Engaging employees and key stakeholders ensures alignment and helps mitigate succession risks.
A well-communicated plan boosts confidence and helps maintain company culture during leadership transitions.
Risk #4: Overreliance on the Owner
When institutional knowledge rests solely with you, it’s a liability. Overreliance on the owner can create significant risks during the succession process. Mitigate succession risks by sharing knowledge, offering development opportunities, and building leadership development programs that strengthen the talent pipeline.
Risk #5: Ignoring the Financial and Legal Details
Without solid legal and financial preparation—including external benchmarking, buy-sell agreements, and estate planning—the succession process can become chaotic and unpredictable. These are critical factors in protecting business outcomes, avoiding internal conflict, and supporting a seamless transition.
A Hypothetical Example: The Retailer Who Didn’t Plan
Erica owned a successful home décor store for 17 years. She figured she’d sell “someday” but ignored succession strategies.
When a personal emergency forced her to step away, the business faltered due to leadership gaps and a lack of succession candidates. Revenue dropped, employee morale tanked, and the eventual sale delivered far less than the business was worth.
Additional Considerations for Effective Succession Planning
Many organizations and most companies fall short because they overlook critical elements.
To ensure success:
Develop succession strategies that build talent pools and prepare the next generation of leaders.
Provide development opportunities and growth opportunities to equip potential successors and new leaders with the necessary skills and knowledge.
Focus on performance management practices that align with business goals and organizational performance.
Identify key leaders and critical roles early and create targeted development plans to fill leadership gaps.
Remember: Investing in these steps today creates a stronger, more resilient organization, one that is ready for whatever comes next.
How to Avoid These Risks (Without Overthinking It)
Effective succession planning doesn’t mean knowing every answer right now—it means asking the right questions and developing succession plans that address leadership gaps and identify high-potential employees.
Here’s how:
Start early, even if you’re years away from retiring
Choose and develop your successor intentionally
Communicate your plans clearly to key stakeholders
Build systems so your business runs without you
Work with experts to formalize legal, financial, and tax details
Use performance data and external benchmarking to inform decisions
And if you don’t know where to start? Start with a valuation. It’s a low-pressure, high-impact way to determine your business's current value and understand what needs to happen before you step away.
How Baton Helps You Plan Without the Stress
At Baton, we make succession simple. Whether you’re planning for leadership changes, treating succession planning as a strategic priority, or safeguarding business continuity, we give you the tools, strategy, and support to make it happen smoothly.
Here’s how:
Free business valuations to inform your next move
Structured succession strategies tailored to your business goals
Targeted development plans to help identify high-potential employees and develop future leaders
Transparent support that aligns with your business goals and competitive advantage
You don’t have to do this alone. And you don’t have to wait until it’s urgent.
A Plan Isn’t Just Helpful—It’s Essential
If you’ve been thinking, “I’ll figure it out later,” now’s the time to shift gears. Succession planning is a critical factor for small businesses that want to avoid leadership voids and protect their business units, company culture, and business outcomes.
Ready to protect your business and take the first step?
Get a free valuation from Baton and start building your succession plan the smart way.