October 25, 2024

Challenges Faced by Family Businesses and Closely Held Enterprises in Transitioning Ownership and Management to the Next Generation

Challenges Faced by Family Businesses and Closely Held Enterprises in Transitioning Ownership and Management to the Next Generation

Owners of family-founded and family-run businesses in Arizona face a variety of challenges while building and growing their business. Remaining competitive, staying ahead of market trends, and constantly adapting to the changing demands of consumers can keep business owners busy. The day-to-day demands on an owner’s time may cause succession planning to take a back seat to more pressing priorities.

Although it may not seem like an urgent task to deal with right away, beginning to think about succession planning years in advance can contribute to a much smoother transition when it is time to pass the torch. Taking steps to avoid some of the common challenges can enhance your peace of mind today and make retiring a more enjoyable and far less contentious proposition.

Formalizing Succession Planning

Family businesses often lack a formalized and detailed succession plan. It’s simply not top of mind for many entrepreneurs in the initial years of operating their business. Most small businesses fail within five to 10 years, and transitioning operations to a successor isn’t typically a pressing concern for founders until the business is durable, sustainable and possesses growth potential.

However, it’s not uncommon for successful small business founders to get so caught up in growing their thriving business that they don’t think much about passing their business on.

Many small business owners who are nearing or past 65 years of age are reluctant to step down, especially if there’s no clear successor. Settling on successors and beginning to coach and prepare the future owners and managers early can lead to a more successful transition.

Family Disputes

Familial relationships can complicate the transition process if the founder and current owner has not established a transparent succession plan. Differing opinions within the family, sibling rivalries, disagreements over roles, and conflicts regarding business direction can create tension that spills over into personal lives. These disputes can make the successful transition of a family business particularly difficult.

Preparing the Next Generation

Many founders take pride in passing their business on to their children or grandchildren. Keeping the business in their family may even be part of their retirement plan. It can be difficult to pass a business on to other family members if they don’t possess the necessary skills or experience to take over and smoothly continue operations.

Gaps in leadership development, training or mentorship can hinder transitions. This can also create disunity within the business, especially if long-time and experienced employees are passed over for family members with little experience or proven ability to run the business.

Ownership vs. Management

Clearly differentiating between ownership and management roles can be particularly important, especially in situations where long-time employees are more suited to manage than family members. Some family members may benefit more from ownership without being involved in daily operations, while others may prefer (or feel entitled to) leadership roles within the business.

Deciding on roles in advance and holding to plans can be vital for owners during the transition. Transparency and clear expectations can potentially decrease animosity if some interested parties are disappointed with the outcome.

Balancing Family and Non-Family Employees

Many small businesses have key non-family employees who possess institutional knowledge, unique skills, and sometimes many years or even decades of experience in management. The business’s increased valuation and continued success may be due in large part to these non-family employees, and the continued success of the business may be dependent on them.

Family business owners need to carefully balance their succession plans to ensure key employees aren’t lost due to bitterness or disappointment with decisions. It’s also possible for family members who are given ownership or management roles to face resentment or have difficulty managing employees who feel passed over.

Disagreements Over Valuation

Assigning value to a business can be difficult and lead to disputes among family members who want to sell their share or exit the business. Accurate and clear accounting and forecasting can help ensure every interested party is on the same page regarding valuation.

Preserving the Founder’s Legacy

Founders often have strong emotional ties to the business they founded and built. They may be hesitant to retire or pass the business they built onto their family members if they are concerned their legacy won’t be respected and preserved. Alternatively, they may be reticent about the new generation making significant changes or adopting a different approach to operations.

Addressing the Challenges of Succession Planning

There aren’t always easy or straightforward solutions for some of the common challenges facing business owners during succession planning. Owners who clearly communicate with stakeholders, listen to concerns, and clearly explain their preferences and reasoning may experience more dependable succession outcomes.

Consulting with external advisors, including financial plannerstax professionals and attorneys, may increase the likelihood of a smooth and successful transition. Business owners in Phoenix who are seeking guidance on retirement and succession planning can schedule a free consultation with the team at Fullerton Financial Planning by calling (623) 974-0300.

Begin the Conversation with a Free Retirement Review

This isn’t a sales call. It’s a focused, one-on-one conversation about where you stand and what’s possible from here.

What We’ll Cover in Your Retirement Review


Lifestyle Goals

What do you want retirement to actually look like? Travel, freedom, family, security — we start with the life you want, then build around it.


Current Assets

We’ll review what you’ve built — and help uncover smarter ways to use your 401(k), IRA, or savings more effectively for retirement income.


Income Planning

We’ll identify where your income will come from — and how to make sure it covers what you care about without relying too heavily on the market.


Risk & Tax Exposure

We’ll evaluate how your plan holds up to taxes, longevity, healthcare costs, and market shifts — so your income stays steady, even when life doesn’t.


Long-Term Strategy

We’ll help you turn what you’ve saved into income that lasts — without sacrificing the lifestyle you worked so hard to build.


The Next Steps

By the end of the meeting, you’ll have clarity on what’s working, what’s missing, and what to do next.

What You Get With Fullerton

  • A retirement income plan built around your lifestyle goals — not a generic formula
  • A coordinated investment and withdrawal strategy that supports income for life
  • Social Security timing guidance to help you get the most from your benefits
  • A reliable income floor — often supported by high-quality annuities with GLWBs, when appropriate
  • Tax-smart withdrawal strategies designed to adapt to changing laws and future needs
  • Personalized guidance on Medicare and long-term care planning
  • A clear roadmap for RMDs, Roth conversions, and income sequencing
  • Legacy and beneficiary planning that protects your spouse and supports your values
  • Ongoing reviews and proactive adjustments to keep your plan aligned as life evolves
  • Direct access to your advisor — no call centers, no hand-offs
  • A secure client portal with full access to your plan and documents
    Invitations to Fullerton’s exclusive client events and appreciation gatherings
  • A local, retirement-minded community with shared goals and values
  • Financial confidence for your spouse and family — with clarity, not complexity
  • Experienced, time-tested guidance from a leading independent Arizona-based planning firm focused on your future

Income
Planning

A strategy to turn your savings into reliable, steady income — so your lifestyle stays on track in retirement.

Tax
Planning

Smart planning to reduce future taxes and keep more of your money working for you.

Health Care
Planning

Protection against rising healthcare costs, including long-term care, built into your plan.

Risk
Management

A clear approach to guarding your wealth from market swings, inflation, and the unexpected.

Real Estate
And Legacy
Planning

A plan for your assets and property that preserves your legacy and supports your loved ones.

Planning With Fullerton

Relationship Building

You’re not just another account. At Fullerton, every relationship begins with real conversation — taking time to understand your values, priorities, and goals. That connection becomes the foundation for a plan that’s built around you, not a formula.

Personalized Experience

No two retirements are the same. Your strategy will reflect your unique goals, lifestyle, and financial position. Everything is tailor-made: your income structured, your tax plan, and the preservation of legacy. The difference in the details — because it is built around you.

Holistic Approach

A good plan looks beyond the numbers. Your lifestyle, your family, your values — it’s all connected. That’s why our planning process considers every part of your life, not just your portfolio — leaving no stone unturned.

See What Fullerton Can Do For You

Going from "I hope this works" to "I know I'm covered".

Experience You Can Trust

Retirement is too important to trust to a generalist. That’s why for over 20 years, Fullerton Financial Planning has focused exclusively on helping people transition from work to retirement — and thrive throughout it. We’re not trying to be everything to everyone. We’re built to help you do one thing incredibly well: Turn your life savings into reliable income and lasting financial confidence.

Why Families Across Arizona Trust Fullerton

  • Over 20 years helping Arizona retirees create income that lasts
  • Trusted by more than 2,000 Arizona households — and growing
  • Independent, fiduciary-based advice — no quotas, no product push
  • Certified Financial Planner™ (CFP®) professionals on staff
  • Regularly featured on ABC15, MoneyRadio, and financial education outlets
  • Local, in-person service — no national call centers or rotating advisor teams
  • Planning approach integrates investments, income, tax, Medicare, and legacy goals
  • Collaborative relationships with CPAs, estate attorneys, and insurance professionals
  • Focused on education-first guidance, not sales pitches or one-size-fits-all plans
  • Supported by a dedicated client service team with a reputation for proactive care

“I was nervous about retiring — but they helped me see the whole picture and gave me confidence to move forward.”

— Mary J., Scottsdale


“They made a complicated plan feel simple. I wish we’d come here five years earlier.”

— Brian & Sandra T., Mesa


“They treated me like a person, not a portfolio. I never felt pressured — just supported.”

— Teresa D., Chandler


“Our old advisor never talked about income or taxes — this team gave us a plan we could actually live on.”

— Kevin M., Sun City

The Fullerton Family

Standing Strong For Clients.
Stepping Up For the Community.

Begin the Conversation

We’re here to listen, understand, and help you take control of your financial future.