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Business owners’ love of work may hinder succession planning

Insurance Forums Staff

Two in three business owners do not have a succession plan in place, with almost 40% percent of them lacking a clear understanding of their need for one, according to a recently released Nationwide survey.

Over 70% of business owners polled in the survey noted that they are not planning to retire, don’t know when they’ll retire or do not plan to retire for 11 years or more.

A majority (55%) of business owners who do not plan to retire report that they love their business too much to do so. Even more Boomers (68%) indicate this is a major reason for delaying retirement. The other reasons for postponing retirement include not feeling financially stable enough to retire (24%) and not trusting anyone else to run their business (17%).

Interestingly, the survey found twice as many Boomers as Millennials have not established a business succession plan (74% vs. 37%).

“Many business leaders correlate succession planning with retirement planning,” said Kirt Walker, president and COO of Nationwide Financial. “If a business owner has no immediate plans to retire, then he or she may not feel a sense of urgency around valuing the business and outlining a plan for successors. Strategically, however, this is a tremendous oversight in protecting the business, partners, employees and customers from an unexpected event impacting key leaders.”

Should a business owner face a serious illness or untimely death, having a business succession plan defined would facilitate a smooth and controlled transition, create certainty about the price, terms and financing of the business and provide a sense of security for surviving family members.

Many business owners are also unaware that most states will use their authority to determine who receives a person’s property if a plan is not in place. Sixty percent of the business owners surveyed were unaware or unsure that, without a defined plan, the state could determine their business’ future.

Getting started

Business owners without a plan can simplify the planning process by breaking it into five manageable steps working with their financial advisor:

Step 1: Set goals and objectives

Step 2: Contract your advisor to determine the fair market value of the company through resources like Nationwide’s Business Valuation Tool.

Step 3: Consider viable options for the business and identify how the options would play out in a disability, retirement or death scenario.

Step 4: Develop a plan and execute documents in partnership with an advisor, attorney and accountant.

Step 5: Fund the plan.

“Business owners will have greater leverage and control in determining their legacy if they’ve been proactive in planning before an unforeseen event occurs,” Walker said.

Advisors can help by proactively reaching out to existing business owner clients and prospects to make sure they either have a succession plan in place or help them begin the process.


Nationwide commissioned a 20-minute, online survey among a sample of 1,069 U.S. small business owners. Small business owners are defined as having between 1-299 employees, 18 years or older, and self-reported being a sole or partial owner of their business. The margin of error for this sample is +/-3 percent at the 95% confidence level. Conducted by Edelman Intelligence, a full-service consumer research firm, the survey was fielded between May 16-24, 2017.

About Nationwide: 
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.



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