How Small Family Businesses Are Handling Succession Planning

Who’s next in line to take over your small family business? Having a succession plan develops future leaders, creates continuity for the company, and ensures its success for generations to come. 

In the past year, 44% of U.S.-based family businesses say they’ve been impacted by succession planning, according to PwC’s 2025 Family Business Survey. 

While succession planning involves preparing a new generation of family members (or other internal leaders) to take the reins, it should go a few steps further. The plan should “prioritize leadership capabilities and organizational needs—regardless of whether the successor is a family member or an external executive,” the report said. 

Succession planning remains a challenge

As succession planning remains a top concern, 47% of family businesses also say talent and leadership development are challenges. The report suggested that “leadership continuity” and the transfer of ownership should be priorities. 

Other challenges include long- and short-term goals: 42% of family businesses say they’re solely prioritizing long-term goals, and 43% are balancing long- and short-term goals equally. 

Family businesses must understand that “the distinct roles of leadership, governance, and ownership [are] essential to ensure smooth transitions and sustained success,” the report said. 

Factors to consider when creating a succession plan

Most family businesses recognize the importance of succession planning. However, just over half (57%) have an established CEO succession plan, and 30% say their succession plan is “behind schedule,” according to a 2026 Deloitte survey of 300 family business executives. 

Here are some factors for a successful succession plan: 

Start early

It’s crucial to have a succession plan in place before the company needs it, according to FamilyBusiness.org. Not doing so could put the organization at “risk of operational and financial disruption if a transition is needed unexpectedly,” according to Deloitte. So start now.

Incorporate the essential elements

There are several important factors to consider when succession planning, including who will own and operate the business (will they be the same people, or different individuals?) and what family dynamics should be incorporated, according to U.S. Bank. Also consider how the transition will impact both the family and the business’s financial, tax, and inheritance situation. 

Look to the future

The company’s short- and long-term goals should guide the succession plan. Organizations should appoint successors who bring fresh perspectives, including on technology and innovation, and “balance respect for the family’s heritage with strategic vision,” according to PwC, whose survey found that 70% of U.S. family businesses have a “documented family vision and purpose statement.” 

Seek outside support

When family and business dynamics are integrated, seeking independent perspectives and support for a company’s future is important, according to Deloitte. Having a board of directors or family council can be helpful and ensure that succession planning remains a priority.

Choose the next leaders

It’s important to develop leaders (including family members and others) who can balance an organization’s legacy with its vision and goals to keep the business running smoothly, according to PwC. Deloitte’s survey found that 61% of family businesses have at least one family member interested in becoming the next CEO, but just 23% believe these individuals are ready to assume the position in the near future. Education, on-the-job training, and mentorship can help prepare the next generation of leaders. 

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