A company that appears strong at face value can unravel almost overnight if an owner becomes unexpectedly ill or otherwise incapacitated. For many owners, their business is not just their primary source of income, it’s a large part of their identity and represents decades of work and dedication. Without a clear succession plan, however, that legacy could be left to chance rather than intention.

“Succession planning is one of the most important, yet often overlooked, decisions a dealership owner will make,” says Derek Garber, managing director, Haig Partners, a business broker that works with dealerships. “For many people, the business represents not only a primary source of income, but also a lifetime of work, relationships and identity.” As a result, many dealers want to see their legacy continue into the future.

Tom Marx, senior partner at Hart Marx Advisors, calls succession planning one of the most critical challenges any business faces. “It impacts the value of the business, the salability of the business, and what the future will look like going forward,” he explains. In other words, succession planning is not just about retirement. It directly affects the long‑term health and stability of the company.

Why business owners put it off

Despite its importance, owners may delay succession planning for years. According to Pat Godwin, Jr., president of Godwin Manufacturing, a family-owned truck equipment manufacturer, the hesitation is often emotional. Godwin believes business owners put off succession planning is because they do not want to think about death. As a second‑generation owner, Godwin is thankful his father’s CPA encouraged him to create a will and trust early. That planning ensured a smooth transition and allowed the business not only to survive, but to grow.

Marx says the problem is people don’t stop to think about what will happen to the business if something happens to them. If they want the business to continue, they need to make sure they have good, competent people in place who are able to continue running the business. And they need to have documented who will be taking over leadership of the business whether that is a family member, a key employee or a future buyer. They also need to document how and when control will shift.

Control, not circumstance

Godwin experienced firsthand how effective planning can be. After his father’s passing, the transition was seamless.

“It was just like a symphony; everything just fell into place,” he said. In fact, the success of the transition from the first generation to the second one went so well that Godwin and his sister are already in the process of determining the best way to pass the business on to the next generation.

“At its core, succession planning is about control,” Garber explains. “Without a plan the future of the business is left to circumstance rather than intentions. A well-structured plan allows an owner to determine whether the dealership transitions to a family, key employees or a third-party buyer, and to do so on their own timeline.” Unfortunately, according to Marx, “most people put off the decision until the last moment and that becomes a real problem.”

Start early and be intentional

Experts agree that succession planning should begin five to 10 years before an owner expects to exit the business. That runway provides time to strengthen financial performance, clean up outdated inventory, and develop the skills of incoming leadership. These steps are essential whether the business will remain in the family or be sold on the open market.

How severe are the consequences of not having a plan in place? Without a plan, decision-making becomes reactive, Garber says. “We see situations where businesses are brought to market under pressure, limiting buyer competition and ultimately reducing value.”

In addition, failing to have a plan can cause friction between family members following the passing of the business owner. “Family members may have different visions for the future, varying levels of involvement or unequal capabilities to lead the business,” Garber explains.

Get the right help

Succession planning is complex and shouldn’t be attempted alone. Godwin advises working closely with legal and financial professionals to ensure everything is properly structured. Marx also recommends bringing in an outside consultant who specializes in succession planning. “They can help you establish a timeframe, a financial goal, a methodology on how the transfer will occur, will make sure everything is protected and will ensure the documentation is completed, Marx says.”

The process is more complicated if the goal is to pass the business on to the family when there are members who are uninvolved or who have no interest in the business. In that instance, a partner or even a private equity firm can be brought in to provide liquidity for those family members while keeping the business intact.

Not every business stays in the family

However, a business does not need to be passed on to a family member. According to Garber, that is a common misconception about succession planning. “While that is certainly one path, it is not always the best or most practical solution, he says.” Not every family wants to run a dealership, nor is every family member capable of doing so.

Marx believes passing a business on to the next generation of interested leaders can be good for a business. “When you have a change in generation, there is a different energy and a more contemporary view of the business. That is a positive thing. Bringing in a new generation brings new ideas, new concepts and it can cause the business to take off and expand dramatically.”

For Godwin, who began working in the business when he was 10 years old, his father’s planning for orderly succession of the business was instrumental in how well it is doing today. “We’re in really good shape and everything is going just as he would have liked it to go. It has been helpful to my sister and I to not have to guess about how he wanted things to be done.”

The clarity gained from his father’s foresight spared his family from uncertainty and inspired him to urge fellow business owners to do the same.