A statistic that rarely reaches the headlines will define the next decade of American small business. Aging baby boomers own roughly 2.3 million privately held U.S. businesses with employees, close to 45% of all such firms, and those companies employ about 24.7 million people, or one in six American workers. The generation that built them is heading for the exit. About 4.1 million Americans turned 65 in 2024 alone, roughly 11,200 a day, the fastest such wave in the country’s history.
The handoff is where the trouble starts. Most of these owners have no plan for what happens to the business once they stop running it, and the gap carries consequences for employees, families, and local economies far beyond any single storefront. Nicholas Mukhtar, founder of the Fort Lauderdale consulting firm Tera Strategies, has spent years advising business owners and family offices on exactly this transition, and he keeps meeting the same avoidable failure.
The planning gap, by the numbers
A 2024 Gallup poll conducted with the Ewing Marion Kauffman Foundation put hard figures to the problem. Surveying 1,264 owners, it found that 55% either intend to close their business or hold no long-term plan for it, and 33% either lack a plan altogether or are unsure what will become of the company they built.
Money makes the stakes personal. Data from the Exit Planning Institute shows that only 20% to 30% of the companies that go to market actually sell, which can leave as many as 80% of would-be sellers without a clean way to turn a business into retirement wealth. An owner who treats the company as a retirement account, then never readies it for sale or succession, is betting a life’s savings on a coin flip.
The unpreparedness has little to do with a shortage of options. Awareness of exit paths, from selling to a competitor to transferring ownership to employees, has climbed sharply over the past decade. Knowing the options and acting on them are different things, and most owners still reach the end of their working life with the question unresolved.
The stakes reach past the owner
A business without a plan for its future does not fail quietly. Those 2.3 million boomer-owned firms support roughly one in six American jobs, which means an owner’s failure to plan can put employees, suppliers, and a local tax base at risk alongside the family’s wealth.
Mukhtar frames the omission as a betrayal of the owner’s own motive. The company was built for the family and the future, yet the absence of a plan leaves both exposed. The people who depend on the business rarely learn how fragile its continuity is until the founder is gone.
What the unprepared owners have in common
Mukhtar’s explanation for the pattern is less about spreadsheets than about attention. “The ones who make mistakes are often so busy building their business, doing whatever led to their success, that they forget why they’re doing it: for their family and the next generation,” he has said. The same drive that grows a company can crowd out the slower work of arranging its future.
He has watched the cost of that omission land on families who were never brought inside the business. “The biggest mistake is not getting their kids involved early enough. You don’t know what life has in store,” Mukhtar has said, recounting cases where an owner died or was injured and heirs “truly have no idea what their parents built, how they built it, how things are set up, or what to do.” Fewer than 15% of these businesses are typically passed to family members at all, a figure that reflects how rarely the next generation is ready or willing to take the reins.
The owners who get it right
The owners who get it right supply the counter-example. Mukhtar describes clients who fold their children into the mechanics of money and ownership decades before any transfer. “They set their kids up with a small account at age 10 or 11, have them pick stocks, and teach them the value of time in the market, saving money, and allocating into buckets,” he has said. One family framed it for a child as a lemonade stand: “If I have a lemonade stand, put 30% here, 30% here, 30% there.”
Wealth and sophistication matter less here than most owners expect. “When you’re a high-performing, high-achieving individual, it’s even harder to slow down and actually do family planning with the people who matter,” Mukhtar has said. Owners who transfer well, in his account, keep the family close to the business the whole way through, so that succession becomes a continuation rather than a scramble.
Early exposure does more than pass along information; it builds the judgment the next generation will need. A child who has picked a few stocks and split a lemonade stand’s earnings into buckets grows into an heir who can read a balance sheet and weigh a decision, rather than one handed a company they do not understand.
Why capable owners freeze
Avoidance, more than ignorance, drives the numbers. Planning an exit forces an owner to confront retirement, mortality, and the loss of an identity built over decades, so the task slides to next quarter, then next year. Mukhtar sees the same postponement among his most driven clients, the ones least accustomed to slowing down.
The irony is that the owners with the most to protect are often the ones who plan last. Success itself becomes the excuse, each busy year another reason to defer the one decision that determines whether the business outlives its founder.
Why the clock matters now
Timing turns an individual oversight into a structural risk. The retirement wave and the ownership wave are the same people: about 51% of the current American business market sits in boomer hands, by the Exit Planning Institute’s count, and the demographic peak runs through 2027. A market cannot absorb millions of businesses for sale at once on generous terms, which means unprepared owners are likely to meet soft prices, rushed deals, or no buyer at all.
A workable plan need not be elaborate. Naming a successor, writing down how the business actually operates, and giving heirs or key employees real exposure years ahead cover most of the ground. Most owners are perfectly capable of doing all of this. The ones who stumble simply never begin.
Mukhtar’s counsel starts earlier than most owners want to hear. Bringing in heirs, documenting how the company runs, and naming a successor are the work of the decade before retirement, long before the final year on the job. Owners who begin while the business is still theirs to shape keep the choice in their own hands. The 2.3 million who wait risk handing that choice to circumstance.
