Small, medium and micro enterprises (SMMEs) are key economic drivers as there are between 2.4 million and 3.5 million of them in South Africa. Statistics released at the time of the 2025 State of the Nation address, show that SMMEs inject more than R900m into our economy every year, helping secure the future of our country. Unfortunately, many business owners fail to plan for their own future by neglecting the important business of making sure their affairs are in order. This could place all their hard work and their investment at risk.

Wills and estate specialists Capital Legacy report that surprising numbers of business owners pass away without putting two areas of their organisations in order: financials and succession planning. It sounds counterintuitive because business owners could be expected to be good at forward-planning. However, it turns out the same reasons many of us put off making sure our affairs in order, also apply to business owners: procrastination, not being knowledgeable about estate planning, thinking there’s more time, and not wanting to confront their own mortality.

Capital Legacy national quality and service manager, Spamer Durr, says: “Even in cases where business owners pass away having drafted wills, we start the deceased estate administration process only to find issues with the management function of accounting and financial control: statements not up to date, tax returns outstanding, taxes not paid up, no professional auditor overseeing accounting and financial controls, and no valuation. For this valuation to be done, the financials must be up to date, at least for the two most recent financial years, and there must be an active accountant or auditor involved at the company. It is easy to get the valuation if this is the case, but if not, then matters become a lot more complicated.”

Delays in the deceased estate administration of a business owner can have serious consequences for employees, customers, suppliers, business partners, shareholders and anyone else who is involved or reliant upon that enterprise. The business could be unable to conclude new contracts or extend existing ones, bank accounts could be difficult or impossible to access, salaries could go unpaid, debts and taxes could remain outstanding, and more.

These are risks best avoided and to this end there are two things every business owner should attend to, without delay:

1. Draft a will

The owners of SMMEs are often in sole charge. Therefore, they run even greater risks than larger enterprises if they pass away without their affairs being in order. They should:

• Draft an official will to make clear who must take over the business.
• Appoint an executor to administer the deceased estate and distribute assets.
• Name an executor with specialised expertise to ensure business continuity.
• Consider appointing a joint owner or director to minimise the risk of interruptions if something unexpected was to happen.
• Review the will at least once a year to ensure it remains valid and up to date and reflects present circumstances.

2. Put a succession plan in place

Ken Newport, national manager of succession planning at Capital Legacy

This is the second critical part of ensuring the future of a business. It is never too early to start identifying and training potential leaders who could step in when the owner retires or passes away. “Even in a family business, succession should never be a birthright,” says Ken Newport, Capital Legacy national manager succession planning. “Often, for personal or financial reasons, the nearest family member or oldest child takes over, but this does not mean that person is willing or qualified to do a good job.”

There are many benefits to starting your succession plan sooner rather than later:

1. Time and opportunity to vet candidates.
2. Review goals and processes.
3. Actively develop successors.
4. Avoid power struggles.
5. Time to consider the legal, financial and tax implications to ensure a smooth transition.
6. Come to terms with the fact that you will not be in control forever.

“A common challenge with succession planning is a buy-and-sell agreement that was not drawn up correctly, or the absence altogether of a buy-and-sell agreement enabling partners to buy the estate’s stake in the business entity,” Newport says.

A recent real-life example saw a business owner pass away without a valuation of his business in place due to the last two years’ financials not being up to date. The buy-and-sell agreement was also tied up in the deceased estate meaning it could not be executed. With no valuation and no-one to buy it after the owner’s death, this business was left badly exposed and at significant risk.

“Deceased estate administration takes time. Understanding how it impacts business structures and applies to companies can help you take steps to secure your business and avoid costly delays that can negatively impact its future viability, and the lives of those associated with it,” Newport concludes.