Cecily O'Connor
RedwoodAge.com

With plans to retire in five years, Scott Hauge is finalizing a deal to sell his business, CAL Insurance, to a colleague.

"I could sell my business quickly to a national broker, but CAL Insurance would cease to exist," said the 57-year-old business owner, whose brokerage "has been around since 1927. My dad was in it, and I want to keep our customers around."

Hauge, who also serves as president of Small Business California, a trade group, is mindful of succession planning at CAL Insurance. But not all of his baby boomer counterparts are as engaged.

Most business owners, particularly those in family ventures, are wrapped up in daily operations to the point where succession planning becomes an afterthought, according to Ron Johnson, chair of the International Business Brokers Association (IBBA), a nonprofit organization that acts as an intermediary of sellers and buyers of businesses. 

"It can certainly be an emotional issue that a business owner doesn't want to face," said Johnson. "They don't want to think of their business going on without them."

But putting off planning could be disastrous.

"A succession plan is important when you retire," Johnson said. "It's just as important if there's an unexpected illness, disability or even death."

IBBA offers these tips:

• Bring in outside experts. Business intermediaries, for example, can help business owners look more objectively at the venture and their goals.
• Involve family members. Developing a succession plan and simply announcing it to the family could being discontent when the plan is revealed.
• Train successors. Take time to work with the person selected to take over so he or she knows what's needed to keep the business up and running.
• Look at all options. Consider that management and ownership aren't necessarily one and the same. You may look to one family member as a manager, but transfer ownership equally to several members of the family.
• Be realistic. Sometimes turning the business over to your eldest son or daughter may not be the best option. Consider another family member, someone else within the company, or selling the company to an outside party.

Mr. Hauge added that business owners should also take into account the tax implications of their succession plan, especially if they decide to sell their company.