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By Pedro Antonio Díaz Cachay, Graduate Research Assistant, Dept. of Agricultural Economics, Purdue University

Family businesses have a prominent presence around the world, constituting 70 – 90% of global firms (Zellweger, 2017). These businesses play an important role in regional economies and employment rates (Shepherd and Zacharakis, 2000). This article explores how exit intentions among small family businesses vary across the North Central Region (NCR) using data from the NCR-STAT: Small Business Survey (Wiatt et al., 2024). The Small Business Survey contains 1,287 responses from small business owners; however, our analysis focuses only on respondents who identified their firm as a family business, resulting in 494 observations.

Chua et al. (1999) describe family businesses as firms in which a defining feature is the intention to transfer ownership and control to the next generation within the family. In this study, survey respondents self-identified whether they considered their small business to be a family business. Our focus is the North Central Region, which consists of the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. Understanding where family businesses are located across the region is an important first step in analyzing their transition decisions. However, location alone does not determine whether these firms are prepared for the future. In the next section, we examine how succession planning varies across family businesses in the North Central Region as an indicator of readiness to transfer the firm to the next generation.

1   Are Family Businesses Ready to Transition?

We begin by examining where these businesses are located within the region and what percentage of them report having a plan to transfer the business to the next generation. Figure 1 displays a map of the North Central Region showing the number of family businesses surveyed in each state and in parentheses those that have a succession plan. Nebraska has the largest number of family business respondents, with 55 out of 105 small businesses identifying as family firms, which represents 52% of all small businesses in the state.

Iowa and South Dakota follow, each with 48 family business respondents, representing 44% and 47% of the small businesses in their respective states. At the other end of the distribution, Ohio has the fewest family business respondents (32), accounting for 30% of small businesses in the state. The remaining states (Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, North Dakota, and Wisconsin), report between 33 and 43 family business respondents, representing between 30.2% and 39.4% of total family businesses on these states.

Figure 1 also reports, in parentheses, the percentage of family businesses in each state with a succession plan in place to transfer the business to the next generation. Iowa has the highest share at 58.3%, followed by Illinois (52.8%), Indiana (52.6%), North Dakota (51.2%), and South Dakota (50%). These states are the only states in the region where at least half of family businesses owners report having a succession plan.

Several states show more moderate levels of succession planning, including Kansas (48.7%), Michigan (45.5%), Nebraska (41.8%), and Ohio (40.6%). The lowest rates are found in Missouri (35%), Minnesota (34.1%), and Wisconsin (31.7%), suggesting that a majority of family business owners in these states have not yet formalized a plan for transferring their businesses.

These differences point to substantial variation in succession readiness across the North Central Region. While some states show relatively strong preparation for generational transfer, others lag considerably, indicating clear opportunities for Extension programs and advisory services to support family business owners in developing formal succession strategies.

Figure 1. Small Family Business Survey Respondents by State and the Percent of Businesses with a Succession Plan (N=494)

Source: NCR-Stat: Small Business Survey (Wiatt et al., 2024).

2   Intention Is Not Planning: Do Succession Intentions Lead to Action?

2.1   Gender and Succession Planning

Table 1 presents the relationship between gender and whether owners already have a succession plan for the next generation. The data reveal a gender-based difference in succession planning, with male owners exhibiting a higher propensity to establish formal transition plans than female owners, as detailed below.  Male owners constitute the largest group, representing approximately 66% of respondents (328 of 494). Of these, 158 report having a succession plan, meaning 48.2% of male respondents have taken steps to formalize a transition strategy. Female respondents make up the second largest group at about 33% of the sample (164 of 494), with 39.6% (65 owners) reporting a succession plan. The non-binary or non-conforming category includes only 2 respondents (one with a succession plan).

Table 1. Survey Respondents by Gender and Succession Planning (N=494)

Source: NCR-Stat: Small Business Survey (Wiatt et al., 2024).

Overall, the demographic picture reflects predominance of male owners in the sample, both in total numbers and among those with formal succession plans, alongside very limited representation of non-binary or gender non-conforming individuals. These patterns provide important context for interpreting gender-based differences in succession planning across family business owners in the North Central Region.

2.2   The Gap Between Exit Intentions and Succession Planning

Transferring a business to the next generation does not happen by default. It requires deliberate planning: deciding who will take over, under what terms, and through what process. Yet owners may hold clear exit preferences without having translated them into a formal succession plan. Figure 2 compares owners’ stated exit intentions (how they wish to exit the business upon retirement), with whether they have actually developed a succession plan to carry that intention out.

The survey asked respondents to select one of five exit options for when they plan to retire:

• The business will be given to a family successor: This was the most preferred choice, selected by approximately 53.4% of respondents. Despite this strong preference for family transfer, only 45.9% of those who chose this option have a succession plan in place, compared to 54.1% who do not.
• The business will be sold to a family successor: This was the second most preferred option, selected by 16% of the sample. Here too, the majority lack a formal plan, with 51.9% reporting no succession plan versus 48.1% who have one.
• The business assets will be liquidated: Somewhat surprisingly, liquidation ranked third at 13.8% of the sample (ahead of selling to an outside buyer or to an employee). Given the importance family business owners typically place on business continuity and socioemotional wealth, this result is noteworthy. Consistent with an intent to simply exit, only 33.8% of respondents selecting this option have a succession plan.
• The business will be sold outside the family: Selected by 11.3% of respondents, this is the only exit option where the share with a succession plan (55.4%) exceeds the share without one (44.6%).
• The business will be sold to an employee(s): The least selected option, chosen only by 4% of the sample. A majority of these respondents (55%) do not have a succession plan.

Figure 2. Succession Plan and Exit Strategy (N=494)

Source: NCR-Stat: Small Business Survey (Wiatt et al., 2024).

2.3   Desired Outcome and Planning Among Male and Females

Table 2 breaks down exit strategy preference and succession planning rates by gender. Both male and female respondents show the strongest preference for giving the business to a family successor. Among those who selected this option, 35.6% are female and 64.3% are male. However, succession planning rates for this exit strategy fall below 50% for both genders: 40.4% for women and 47.6% for men.

The only exit strategy where both genders show planning rates above 50% is selling the business to someone outside the family (54.5% for women, 57.6% for men). At the other extreme, none of the female respondents who desire to sell their business to an employee have a succession plan in place, while among female and male respondents, the lowest planning rate is associated with liquidation (36.4%).

Across all desired exit strategy categories, male respondents show higher succession planning rates than female respondents. In most cases, this gap is relatively modest, under 10 percentage points. The notable exception is the “sell to an employee” option, where the gap between male (57.1%) and female (0%) respondents is approximately 57 percentage points. This result, however, should be interpreted with caution given the very small number of female respondents (5) in this category.

Table 2. Desired Outcome and Planning Succession by Gender (N=494)

Source: NCR-Stat: Small Business Survey (Wiatt et al., 2024).

3   Do Expectations Match What Owners Want?

We have explored the exit preferences of family business owners with regard to succession. But preferences alone do not determine outcomes. Owners were also asked in the survey about their expectations (what they actually anticipate will happen to their business in the next generation, as distinct from what they would prefer). Figure 3 compares these two dimensions across each exit strategy option.

The most notable shift involves the most common exit preference: giving the business to a family member. While 52.3% respondents express this as their desired outcome, only 47.7% actually expect it to happen, a meaningful gap between aspiration and anticipated reality. By contrast, expectations exceed desires for selling to a family successor, liquidating the business assets, and selling the business outside the family, with expectation shares rising between 1.8 and 12.4 percentage points above their corresponding desire shares. The option of selling to an employee also declines from desire to expectation (from 20 to 13 respondents), suggesting than even fewer owners believe this path will materialize than wish for it.

Figure 3. Succession Desire Versus Expectation in Family Business Owners (N=494)

Source: NCR-Stat: Small Business Survey (Wiatt et al., 2024).

The data allow for a state-level analysis of how closely desire and expectation align across each of the twelve states in the North Central Region (see Figure 4). Missouri stands out with the highest alignment rate at 92.5% (the only state where more than 90% of respondents hold expectations consistent with their stated desires). Most states cluster in the 80-89% range, including Ohio (87.5%), Iowa (85.4%), Minnesota (82.9%), Kansas (82.1%), Indiana (81.6%), Illinois (80.6%), and Nebraska (80%). Three states fall below this band: Michigan (78.8%), Wisconsin (73.2%), and South Dakota (70.8%). North Dakota records the lowest alignment in the region at 67.4%, meaning roughly one in three respondents in that state expects an outcome different from what they actually want for their business.

Figure 4. Alignment Between Expectations and Desired Outcomes in the North Central Region (N=494)

Source: NCR-Stat: Small Business Survey (Wiatt et al., 2024).

Taken together, the results in this section reveal a consistent pattern: family succession is what most owners want, but many do not expect it to happen. The shift in expectations toward liquidation and outside sales is especially telling, it suggests that some owners who prefer to keep the business in the family may have already accepted that doing so is unlikely. This disconnect between desire and expectation does not necessarily reflect resignation; it may also signal incomplete or insufficient succession planning, limited awareness of succession options, or a lack of access to professional advisory support. At the state level, the variation in alignment (from 67.4% in North Dakota to 92.5% in Missouri) points to meaningful regional differences that warrant attention. States where desire-expectation gaps are widest, particularly North Dakota, Wisconsin, and South Dakota, may represent the most pressing opportunities for Extension programs to help owners close the gap between what they want and what they believe is possible.

4   Do Expectations About the Future of the Business Differ by Location?

Family business owners were also asked about their residential location. Respondents classified their households as urban, suburban, or rural, using descriptions applied in the survey (see Table 3), consistent with the approach of Williams et al. (2023). It is important to note that multiple frameworks exist for defining these residential categories, including those discussed by Bednarik (2022).

Table 3. Description of Residential Locations

The distribution of respondents reveals that nearly half of family business owners in the North Central Region reside in rural environments, reflecting the strong connection between family businesses and local communities in less populated areas. This pattern aligns with the significant role small businesses play in rural economies, where they employ 54.3% of workers and operate 84.8% of business establishments (Wilmoth, 2023). At the same time, the substantial shares of suburban and urban residents indicate that family firms are not limited to agricultural or small-town contexts, as they also thrive in more developed areas.

Turning to expectations about the future of the business, Figure 5 shows that across all three residential settings, the most anticipated outcome is passing the business to a family member: 48.1% of rural owners, 49.3% of suburban owners, and 51.2% of urban owners expect this to occur. For rural and urban owners, the most expected outcome is selling the business to a family member; for suburban owners, the second most anticipated outcome is liquidation of business assets. Liquidation ranks third for both rural and urban owners (16% and 16.3%, respectively). Selling the business outside the family is relatively consistent across locations, at 14% for both suburban and urban areas and 11.8% for rural areas. Selling to an employee is consistently low across all three settings: 3.3% for rural, 3.7% for suburban, and just 0.8% for urban family business owners.

Figure 5. Succession Expectations by Residential Location of Family Business Owners (N=494)

Several patterns in this section merit attention. The expectation of keeping the business within the family (whether through a gift or sale to a family successor) is the dominant anticipated outcome across all three residential settings. This suggests that the desire for intergenerational continuity is not specific to rural or agricultural contexts; it is broadly shared regardless of where owners live.

The suburban setting stands apart in one respect: liquidation ranks as the second most expected outcome of suburban family business owners, whereas rural and urban owners more commonly expect a family sale in that position. This difference may reflect distinct economic pressures or planning dynamics in suburban communities that warrant closer examination. The near absence of employee buyout expectations among urban owners (0.8%) is also striking relative to rural (3.3%) and suburban (3.7%) peers and may point to differences in firm size or workforce relationships across these contexts.

5   Conclusions

Across all sections, a single finding stands out with unusual consistency: family business owners in the North Central Region want to keep their businesses in the family, but most have not taken the concrete steps needed to make that happen. Giving the business to a family successor is the most commonly stated exit preference, chosen by over half of all respondents, yet fewer than half of those same owners have a formal succession plan in place. This gap is not incidental. When asked not what they want but what they actually expect to happen, fewer owners anticipate a family succession than desire one, with some having quietly adjusted their expectations toward liquidations or an outside sale instead. The pattern holds across gender, residential setting, and most states in the region: the wish for intergenerational continuity is widespread, but the planning infrastructure to support it is not. For the majority of these businesses, the road to succession remains more aspiration than plan.

This consistency, however, coexists with meaningful variation. At the state level, succession planning rates range from 31.7% in Wisconsin to 58.3% in Iowa, and desired-expectation alignment spans from 67.4% in North Dakota to 92.5% in Missouri, differences large enough to suggest that regional context, economic conditions, and available resources shape outcomes in ways that aggregate figures alone cannot capture. Gender also matters; male owners not only make up two-thirds of the sample but consistently show higher succession planning rates than female owners across every exit strategy category. While the gap is modest in most cases, it points to potential differences in how men and women access or prioritize succession support. Residential location, by contrast, reveals a notable degree of uniformity, the expectation of family succession is the dominant anticipated outcome across rural, suburban, and urban settings alike, suggestion that the desire for intergenerational continuity transcends local context. The suburban setting offers a partial exception, with a higher share of owners expecting liquidation as a secondary outcome, a finding that may warrant further investigation.

These results carry clear implications for Extension programs and stakeholders in the North Central Region. The succession planning gap is not concentrated in one type of community or among one demographic group, it is broadly distributed across the region. At the same time, the variation across states, gender, and location points to opportunities for more targeted approaches. States where the gap between desire and expectation is widest, particularly North Dakota, Wisconsin, and South Dakota, may represent the most urgent cases for intervention. Female business owners, who show lower planning rates across the board, represent an underserved segment that could benefit from dedicated outreach and support.

Rural communities, which account for the largest share of family business owners in the region, remain natural and important focus for Extension engagement. Ultimately, the findings underscore a straightforward but consequential message: succession planning is not something most family businesses will arrive at on their own. Proactive outreach, accessible planning resources, and continued research into the barriers that prevent owners from translating their intentions into action are essential if the region’s family businesses are to successfully navigate the transition to the next generation.

References

Bednarik, Z. (2022, January 20). Rural–urban classification used by NCRCRD. North Central Regional Center for Rural Development, Purdue University. https://ncrcrd.ag.purdue.edu/2022/01/20/rural-urban-classification-used-by-ncrcrd/

Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneurship Theory and Practice, 23(4), 19-39.

Shepherd, D.A., Zacharakis, A., 2000. Structuring family business succession: an analysis of the future leader’s decision making. Entrepreneurship Theory and Practice, 24(4), 25 – 39.

Wiatt, R. D.; Marshall, M. I.; Wilcox Jr, M. D.; Bednarikova, Z.; Adams, N.; Katare, B. (2024). NCR-Stat: Small Business Survey. Purdue University Research Repository. doi:10.4231/6VG5-5386.

Williams, O.; Wilcox, Jr., M. D.; Wiatt, R. D. (2024, December 10). Review of Business Owner Demographics in the North Central Region. North Central Regional Center for Rural Development. https://doi.org/10.22004/ag.econ.348436.

Wilmoth, D. (2023, August 22). Small business facts: Small businesses in rural areas. U.S. Small Business Administration, Office of Advocacy.

Zellweger, T. (2017). Managing the family business: Theory and practice. Edward Elgar Publishing.

Suggested citation

Díaz Cachay, P.A. (2026, April). The Road to Succession: How Exit Intention Decisions in Family Businesses Vary Across the North Central Region. North Central Regional Center for Rural Development. https://doi.org/10.22004/ag.econ.397836