The purpose of this study is to empirically analyze the causal relationship between the influence of the differentiation strategy on the management performance of small and medium-sized business successors, who are shaped by the characteristics of the company and its environment. A survey was conducted on 256 business successors in the metropolitan area, and SPSS 29.0 and AMOS 29.0 programs were used to test the hypotheses of the established research model. The results of the empirical analysis showed that environmental characteristics had a greater influence on business successors than the company's characteristics. Second, the influence of the business successors had a positive effect on the company's differentiation strategy. Third, the differentiation strategy was found to have a strong correlation with the company's financial performance, and it was found to have a positive (+) effect on non-financial performance. Fourth, the financial performance of family businesses was found to have a significant influence on their non-financial performance. This study aims to broaden the understanding of why business successors prefer and choose differentiation strategies by combining theories of strategic management and business succession. Existing research on business succession has focused primarily on succession and management performance, with relatively little empirical research on strategy selection. The novelty of this study lies in its unique focus on strategy selection, which will likely aid in designing customized consulting and support policies for future succession companies. This novel approach is sure to intrigue and interest the audience.