This lack of planning can invite unfavorable consequences for the owner’s financial picture, his or her family, the business itself and its employees.

Owner’s Finances. One result of failure to plan ahead for business succession can be unnecessarily high taxes. Small business owners often have a large part of their net worth tied up in their businesses, and often depend on that money for retirement income.  Without planning, an owner can lose much of that nest egg to tax obligations.

So owners need to consider, in advance, what they can do to minimize income and estate taxes. They should also make sure an orderly transition provides for financial security for the owner and a spouse during retirement years.

Owner’s Family. In the event of a business owner's death, family members may be forced to deal with significant business and tax issues during a time of grief.

The result of a failure to plan may result in the lack of adequate provisions for the owner's family members. Also, family members may not be capable of running the business. Worse, capable family members may wind up feuding with incapable siblings or other relatives.

If a business owner wants to transfer ownership of a business to selected family members or to equalize transfers to children, a plan for those transfers needs to be implemented. It may be very important to the owner to make sure the plan promotes family harmony.

One important aspect to consider is the involvement, capabilities and interest levels of family members. It needs to be determined whether or not there are non-involved family members interested in a family business.

The capabilities and interest of key employees should often also be considered.

The Business. A lack of planning could devastate the business itself. The business may need to be liquidated, or let go in a quick sale, if there has been no plan developed for a more prudent transfer. In such a sale, the character of the business may change or the business may need to be relocated.

The business owner should look at the feasibility, or sometimes necessity, of a sale of the business as a succession strategy, and plan for that possibility. In some situations, the sale of the business is the best option.

For one, a sale may be the best way to obtain optimal value for the business. There may be a lack of commitment from family members, or there may be no competent successor. The risks of failure from keeping the business in the family may be high.

Employees. Finally, a lack of planning could affect a company's employees. Some employees may end up unemployed. Loyal and capable employees whom the owner may have intended to be involved in the business may be kept from involvement.

An owner may want to provide job security for employees, and will need to plan for ways to encourage that result. Another goal may be to provide for the transition of management responsibilities. Another could be to ensure the continuation of the business.

The best succession plan for one business owner is likely to be very different from the best plan for another. A good succession plan considers the owner's most important goals and objectives. Part of process includes choosing among priorities, especially if time is limited.

Business owners should take the time to meet with the appropriate advisors to prepare a plan together. Trusted advisors can help craft a plan that meets the goals of the owner, family members and the business itself.

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Shawna L. L’Italien is a business lawyer in Salem, Ohio.