Succession plans are essential for small business survival

Many small-business owners are so busy running their businesses that they don't take time to consider who would take over if they became disabled or died.

"It's the goose and golden egg syndrome," said Mark Luttner, managing partner of Iron Bridge Financial in Pittsburgh. "The business owner is the goose, and all too often we insure the egg.

"The buildings, equipment and hard assets are insured and protected," he said. "But the owner is driving everything like morale and day-to-day operation. If something happens to the owner, everything is at risk."

For business owners who envision their companies as an ongoing enterprise after they are gone, a succession plan cannot be postponed.

It's estimated that more than half of all public and private companies have not named a successor.

Raymond Vargo, director of the University of Pittsburgh's Small Business Development Center, said many proprietors "know having a succession plan is a good idea. They just don't have time to get around to it while putting out day-to-day fires. When we work with companies, we identify this as an issue and recommend they dedicate the necessary time to create one."

Luttner is familiar with a family that once owned a thriving manufacturing firm in Eighty Four, Pa. It was shut down when the owner died without a succession plan, leaving his surviving family members with no income stream and workers with no jobs.

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