Business Transitions in the Midwest US: Owner Perspectives

As we’ve noted in past posts, the US is in the midst of a “great ownership transfer,” where as many as 6 million US small businesses will (hopefully) transfer ownership to next generation owners, operators, and entrepreneurs.  Given the magnitude of this transition (exceeding $5 billion in value), it behooves to better understand what’s happening.  And, thankfully, the Purdue University-based North Central Regional Center for Rural Development, which serves the US’s Upper Midwest regions, is here to help.   

A new NCRCRD research report, from Renee D. Wiatt, assesses the ownership transition in the NCRCRD region. The report reviews survey data on how more than 1200 Midwestern small business owners, including farms and non-farm businesses, are preparing for the transition.  Overall, only 38% of firms have a succession plan in place, and most of these owners (44%) hope to pass their business to other family members.   However, they also recognize that these plans may not come to fruition—only 40% of these owners expect their family succession plans to succeed.

These findings suggest several important new policy directions.  First, efforts to expand succession planning are needed.  We need more owners getting serious about business transitions.  We’ll also need to develop more customized solutions for these firms.  When and where possible, owners should get support for passing businesses within the family.  If such options don’t exist, owners will need more support to connect with potential business successors.  Addressing these issues now will make ease the transition process and ensure that wealth can remain in families, businesses, and communities where it was first generated.