“You work for a person, not a company.”

It’s a common career adage, but in small companies, it can feel especially true—sometimes to the extreme. Teams are often described as families (and in some cases, they literally are). Knowing the people you work with and seeing your values reflected in leadership is one of the biggest draws of joining a smaller business. But that closeness also makes leadership transitions a lot trickier—for everyone.

Founders, in particular, tend to have a rare knack for recruiting. They’ve put something real on the line to start the business, so their energy and clarity of vision are hard to replicate. They're often deeply optimistic, able to pitch a future they’re actively building. That kind of passion is magnetic. It’s no wonder that, over time, many of these working relationships begin to feel like family.

And like the old Cheers theme song, even as the company grows, it still feels like a place “where everybody knows your name.” And usually more than that—people know your story, your family situation, and your contributions over time. Those kinds of bonds only form when leadership genuinely takes an interest in the individuals they hire.

That’s why when a founder leaves, the biggest risk to the company isn’t always strategic—it’s human. Others may leave, too. In a small business, losing just a few people can easily mean 10%, 20%, even 40% of the team walking out the door. And with them goes institutional knowledge, customer relationships, and hard-won capability. If enough of that leaves at once, it can signal the beginning of the end.

Some small businesses just aren’t built to survive that kind of shift. They’re what we’d call “untransferrable.” They might be strong businesses today, but if they can’t function without the current operators, ignoring that reality is unfair to the team. The better path is honest planning: merging with another company, transitioning key individuals with client continuity in mind, or even transparently winding things down. None of those options are failures—failure is pretending the problem doesn’t exist and leaving others to clean up the fallout.

That said, many small businesses can and do make successful leadership transitions. One reason we prefer to buy a portion of a company, rather than all of it, and to avoid sudden leadership changes when possible, is because it lets us do two key things:

1. Understand how the team operates without disruption, and

2. Show that we can build a working relationship with the people already trusted by the team.

In doing so, we get the chance to notice what really matters. Does the owner walk the shop floor every morning? Advisors might say that’s not essential—but to the folks showing up at 6 a.m., it probably means everything. Is there someone who’s skeptical of our involvement but implicitly trusts the current owner? With the right mindset and timeline, we can earn that trust. We might not replicate the original relationship, but we can build on its foundation. And then we can use those observations to develop a plan specific to the organization. 

The bottom line is this: small businesses are powered by people. And there usually aren’t that many people, so losing a few can be a big deal. Any succession plan should take that seriously. Ask yourself: who’s most likely to leave if their “person” leaves—and what can you do now to make sure the outcome still works for everyone?