In the July 24, 2007 issue of Crain’s Chicago Business, Gini Dietrich, president of Chicago-based PR firm Arment Dietrich Inc., asked the paper’s small business editor what she should do to prepare for any “worst-case scenarios” in which she would be unable to continue to handle the business side of her company. “I’m afraid that if something happened to me, the business would fall apart,” she wrote.

Dietrich is certainly not alone in her concern. If anything, the topic of succession planning has become more prominent among owners and leaders of small firms.

One, if not the primary, reason for this is because of the sheer number of Baby Boomer business owners who are retiring or who are planning on retiring in the next few years. In its most recent International Business Report, released in June, accounting firm Grant Thornton surveyed more than 7,000 business owners in over 30 countries and found that almost a third (28 percent) of privately held businesses around the world are set to change hands within the next 10 years. Of those businesses, the survey revealed, a quarter will change hands within the next two years.

Still, as Forbes magazine reported last month, citing a recent Aberdeen Group report, fewer than two-thirds (62 percent) of companies have made their search for executive talent a top priority.

After polling more than 600 organizations for its report – 78 percent of which were from North America – its author, Kevin Martin, concludes in theForbes article that firms have two options when it comes to good outcomes in succession planning: recruiting the right talent, or cultivating and retaining the right talent.

Our experience in assisting, evaluating and recognizing some of the most successful small firms across North America indicates that the latter path will lead to results that are not only less expensive to achieve, but which set up the organization to succeed and sustain its mission and values for many generations.

Take, for instance, one of our very first Best Bosses Award winners, Michael Mulqueen, the former executive director of the Greater Chicago Food Depository and a current member of Winning Workplaces’ Board of Directors. He says he took his experience with succession planning from his earlier career in the U.S. Marine Corps and applied it at all levels of the food bank. This not only helped immensely when it came time to seek approval of his handpicked successor, his development director, from the food bank’s board – it helped groom leaders to substitute for managers in the short term, and to fully assume their roles when they leave the organization.

The food bank’s case speaks to the need for more small enterprises to emphasize the development of leaders from within, at all levels.

Not surprisingly, we’re finding internal leadership development a central theme among our 2007 Top Small Workplaces applicant organizations. Instead of turning outside for top talent, these businesses look inward to folks who already understand the organization’s culture and value system. “We do not hire from the outside for our leadership roles,” one firm said in response to a question on internal leadership development, “so it is incumbent on the firm to continuously develop a complete stable of leaders.”

This practice assured the continued success of a 20-year-old firm that understood the potential impact on “morale, turnover, service and the faith of customers” of a planned leadership transition. Recognizing the importance of this shift in leadership from the founder of the firm to an employee of 15 years with broad experience in the organization, the firm chose to involve employees in shaping the transition. They solicited questions, ideas and suggestions from employees over a period of two years, which resulted in a decline in turnover, an increase in profits and revenue that exceeded budget.

You owe it to your current and future employees and to the sustainability of your business take a cue from what these firms are doing around succession planning. Certainly, follow the advice that Crain’s gave Dietrich: Value your company, buy “key-man” insurance for business owners (if you don’t already have it), create a plan and run it past your attorney. But don’t underestimate the resource that you have right under your nose when it comes to succeeding key roles: your current workforce.