How to Create a Business Succession Plan: A Guide to Getting Started

For many business owners, giving serious thought to succession planning is often pushed aside by day-to-day demands. But having a clear plan for what happens to your business once you’ve decided it is time to step back is one of the most important ways to protect what you’ve built.

PNC’s recent Business Owner Wealth Insights Report showsthat nearly 70% of business owners agree planning for the future is important, but 1 in 3 have not yet formalized their succession or exit plan. One of the biggest barriers: the perceived complexity of succession planning.

But effective succession planning provides clarity and doesn’t have to come with complexity.

“At its core, succession planning is about making clear decisions early so you can protect value, maintain continuity, and control your transition,” said Jim Benedict, Head of Business Owner Solutions, PNC Private Bank®.

Transitioning a business can be a complex endeavor that should be done in consultation with experienced advisors. Still, most succession plans share common elements that all owners should think through carefully.

Core Elements of a Business Succession Plan

A business succession plan is a roadmap for how ownership and leadership will transition over time. At a minimum, it should outline who will take over, how the transition will happen, and the steps needed to keep the business running smoothly.

“A thoughtful, written succession plan helps create alignment across stakeholders and supports a transition that reflects both personal goals and long-term business priorities,” Benedict said.

Start With Alignment, Not Mechanics

The most effective succession plans start with clarity on outcomes – not mechanics.

Business owners are typically balancing several priorities:

personal financial security and retirement timing;
future direction of the business; and/or
expectations of family members, partners, and employees.

Clarifying these priorities upfront can make later decisions easier. For example, an owner focused on legacy may lean toward a family or internal transition, while one focused on maximizing value may consider a sale.

This alignment becomes the foundation for every other decision – from choosing a successor to structuring the transition.

Identify and Develop Future Leadership

The next step is determining who could eventually lead the business. PNC’s research found that lack of a clear successor was the primary barrier preventing many owners from creating a plan in the first place.

Common successor options include:

a family member;
a business partner;
a trusted employee; or
an outside buyer.

Each option brings distinct considerations, including whether the successor has the skills to lead, how the transfer will be structured, and what level of involvement the current owner will retain.

For example, if a successor is an internal candidate, starting to develop them early for the role will help them to gradually build responsibility and credibility.

“Revisiting the ‘who’ of your succession plan on a regular basis will help inform future financial and timing decisions,” said Benedict.

Create a Transition Timeline

Succession planning works best when it unfolds gradually – not overnight.

Transitions that unfold over several years allow for:

deliberate leadership development and mentoring;
gradual transfer of responsibilities and relationships;
reduced operational disruption; and
greater flexibility in structuring ownership transfer.

Get a Realistic Business Valuation

Many owners either overestimate or underestimate what their business is worth. A professional valuation provides a clearer picture of financial health and helps guide retirement, tax, and other transition decisions.

It also gives an owner a reliable value to incorporate into personal financial planning and a framework to evaluate whether unsolicited offers are credible and worth pursuing. This perspective can also identify ways to strengthen valuation by improving your company’s operations, profitability, or competitive positioning – well before a transition takes place.

Communicate the Plan

One of the most overlooked aspects of succession planning is communication. Clear communication helps build confidence and reduce uncertainty among employees, partners, and family members.

“Even well-designed succession plans can falter without effective communication,” Benedict explained, adding that businesses successfully navigating succession tend to focus on three areas:

Clarity: defining roles, expectations, and the future leadership structure.
Alignment: ensuring key stakeholders share a common understanding of direction.
Consistency: establishing regular opportunities to revisit and refine the plan.

Review and Update Regularly

Businesses evolve – and your succession plan should too.

Review your plan regularly, especially after major business changes, leadership shifts, or personal life events. Keeping the plan current helps ensure it stays aligned with your goals and your company’s needs.

“I’m an advocate for revisiting your succession plan annually,” Benedict said. “Taking time each year to assess whether your long-term goals still align with your current reality can help guide any necessary adjustments.”

Three Steps You Can Take Today

If you’re not sure where to start, focus on a few simple steps:

document your top two or three succession goals;
identify at least one potential successor; and
schedule a conversation with a trusted financial or legal advisor.

Starting with a few deliberate steps can create clarity, build alignment, and move the process from intention to action.

Benedict added: “We tell clients to ‘begin with the end in mind.’ How would they like their family wealth and business to be structured? What do they want to accomplish? What’s important to them? Once we know the answers to those questions, we can look at succession methods and wealth structures.”

Bottom Line

Creating a succession plan may feel like a future concern, but planning ahead can provide peace of mind today. A thoughtful strategy can help protect your business, support your employees, and make the next chapter smoother for everyone involved.

According to Benedict: “the earlier you start, the more options you’ll have – and the more control you retain over what comes next.”

Don’t Go It Alone

PNC specialists can help you develop a tailored strategy for transitioning your business. Contact your PNC Relationship Manager, or click here to learn more.

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