But the day-to-day running of the business comes first, which means answering them is rarely a top priority. The result? Many family businesses still lack formal succession plans.

Unfortunately, that can put the business in jeopardy. According to research by Family Business United , fewer than one-third of family businesses successfully transition to the second generation. The encouraging part is that this is one of the most avoidable risks a business faces. With enough time and the right planning, a smooth, successful transition is achievable.

This article is the first in a three-part series exploring how you can plan, prepare and protect your family business for the next generation. 

In this article, you’ll learn about the dangers of leaving succession planning too late. Part two looks at what good succession planning involves, and part three sets out the practical steps to protect and transfer your family's wealth.

What is succession planning in family business?

Family business succession planning is the process of preparing for new ownership and leadership of a company. The goal is to make the transition as smooth, well-timed and profitable as possible.

A good succession plan answers three questions:

• Who will carry the business forward
• When the handover will happen
• How it will work in practice

It’s important to note that leadership succession and ownership succession can be independent of one another. Business owners can hand over the running of the company without transferring ownership, or transfer ownership while remaining involved in the business.

A complete succession plan also addresses the financial implications of your exit. When done well, it protects the value you have spent years building and gives everyone involved, from your family to your employees, a clear sense of what comes next.

What happens when you leave family business succession planning too late?

When business leaders leave succession too late, or never address it at all, the consequences tend to fall into five areas:

• Business discontinuity. Many owners are the cornerstones of their businesses. If they step away suddenly without a plan and no one prepared to step up, day-to-day operations can falter.
• Diminished business value. A business sold or handed over in a hurry rarely achieves its full worth. Buyers often pay less for a company that depends heavily on one individual and has little management depth beneath them.
• Family discord. Few things test family relationships like the future of a shared business. Questions of fairness can become a source of lasting tension.
• Missed opportunities. The most effective ways to protect and pass on a business need time to work. Many of the available tax reliefs and gradual transfer arrangements reward those who plan years ahead. Leave it late, and those options narrow, often leaving fewer and more expensive routes open to you.
• Tax and legal exposure. Following reforms that took effect in April 2026, passing a business to the next generation is no longer as tax-efficient as many owners assume, and some families now face an inheritance tax bill where previously there would have been none.

As you can see, a smooth succession is about more than just money. What’s also at risk is your legacy, relationships and the livelihoods of the people your business supports.

What makes family business succession difficult?

While succession plans for any business are rarely straightforward, family-owned companies carry a particular set of complications.

In many family businesses, the founder’s and the business’s identity have become closely intertwined. Rightly or wrongly, many owners feel like the business can’t run without them and extracting them from the company can prove difficult.

Family dynamics add another layer of difficulty. Decisions that would be purely commercial in another company become personal. Treating family members “fairly” and doing what’s right for the business aren’t always the same thing, and reconciling the two takes careful thought.

While these are not reasons to put off succession planning, they are reasons to approach it deliberately and with support from trusted advisers who offer an objective perspective.

The sooner you start planning, the better

None of the difficulties or complications surrounding family business succession planning is insurmountable.

With enough time, thought and the right advice, you can ensure a smooth and profitable transition that supports the livelihoods of your family and employees for years to come.

At Rickard Luckin, our specialist team works in partnership with family businesses of all sizes, helping owners plan their future with confidence. If you would like to talk through your own situation, we would be glad to help. Simply get in touch to arrange an informal, no-obligation conversation.

In the next article in this series, we look at what good succession planning actually looks like and how to make the process feel manageable.