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Many small business owners assume that succession planning is something only “big” companies need to worry about. If you’re a solopreneur or run a lean operation, it’s easy to think, “I’m too small for that to matter.”
But here’s the truth: if your business generates income, serves clients, or supports your family, it has value. And just like life or disability insurance protects your family, a succession plan protects the business you’ve worked so hard to build—especially if something unexpected happens.
At Reasonable Compensation Calculated, we focus on helping business owners determine the fair value of their role in their company for IRS compliance and planning purposes. But reasonable compensation is also tied to a much bigger question: what is your business really worth if you’re not there to run it?
What Happens If You Can’t Work?
I came across an insightful article by Don Feldman at Keystone Business Transitions LLC, who posed a critical question:
“What happens to the business if the owner dies or becomes disabled unexpectedly?”
His answer:
“In the case of very small businesses which are wholly dependent on the efforts of the owner, the answer is the business will close. In the case of large businesses, there is a highly developed management team that can ensure the continued operations of the business. But what about businesses in the middle… that are highly dependent on the efforts of the owner/operator?”
The goal, Feldman points out, should be to preserve the business’s value—even if the owner can’t return. While insurance can help replace some financial loss, it doesn't keep the business itself alive or saleable.
Succession Planning Starts with the Right Questions
I’m not a succession expert—but as someone who regularly helps business owners evaluate the fair market value of their role in the company, I’ve had to think critically about the broader implications. Ask yourself:
- Do I have a plan for employees or trusted individuals to take over temporarily?
- Have I created incentives to retain key staff if I’m no longer around?
- Do I have a relationship with another firm that could help manage or sell the business?
- Is there a family member who could be trained to take over?
- Would any of my business contacts be willing to buy the business under the right terms?
These questions aren’t just for “someday.” If you don’t plan ahead, you could unintentionally leave your clients, team, or family without direction—and the business value you’ve created could disappear entirely.
Reasonable Compensation Is Just the Beginning
Understanding your reasonable compensation is an important step toward evaluating your business’s true economic value. But protecting that value means thinking beyond the numbers.
Succession planning might not feel urgent—but waiting until it becomes urgent is a risk that’s just not worth taking.
Want a simple way to get started?
Request our free Business Succession Planning Checklist—a practical tool to help you identify gaps and start building a plan that protects your business and your legacy.
Email us at info@reasonablecompcalc.com to get your copy.
