To ensure the success of the sale, there are a number of factors to consider. From setting realistic expectations to finding the right outside help, selling your funeral business is a difficult act to pull off, but if you do it right, you can guarantee that the sale sets you up for success – whether this means retirement or moving on to your next venture. 

In this guide, we’ll review all the steps an owner must take from start to finish when selling a business. 

Planning is Crucial

Before you start the sale process, it is important to plan ahead. Take the time to understand your business’s current financial health, market position, and future prospects. 

Beyond this, you’ll also want to consider what your goals are with the sale. Are you hoping to exit a lifetime of work and retire in Florida, or are you hoping to sell the business and remain on the team in some capacity?

By planning out what your ultimate aim is, you can begin to figure out when you might sell, for how much, and to whom.

Set Realistic Goals

As you plan, it’s important to outline realistic goals. Naturally, every owner wants to sell their funeral home for the maximum price in the shortest amount of time, but this may not always be possible, depending on the state of your business and the greater market conditions. 

Unlike real estate, in which homes may sell within a day of hitting the market, the death care industry is more specialized. Not just anyone can buy a funeral business, and among those individuals buying, not everyone is qualified.

By being realistic about the timeline of your sale, as well as your business’s asking price, you can prevent settling for less than you’re worth.

Valuation Package or Marketing Package?

Getting a valuation is the best way to internally understand where improvement opportunities exist for creating value. 

A business valuation is an internal product and should not be shared with a potential buyer. Why? A business valuation will have a more conservative review with payroll, marketing, and other expenses that will be adjusted differently and more aggressively under a marketing package. 

The sole purpose of a marketing package is to show the opportunity, minimize the risk, and create value in the business that may not exist today. For this reason, marketing packages are invaluable for business owners who are ready to sell NOW.

Time to Create a Marketing Package

As you begin the process of selling your business, you’ll need to get a professional marketing package created. Not only are marketing packages critical for any qualified buyer to review, but they also can give you an accurate picture of how much money you should ask for.

If the value from the marketing package doesn’t end up where you want it, then it may be best to hold off selling until you can make proper adjustments to your operations. At Johnson Consulting Group, we can help you create a post-valuation plan to improve your enterprise value. 

Understand Tax Implications

When selling a funeral business, it’s essential to understand the entire picture of tax implications. Particularly for those who plan to retire after a sale, it’s imperative that you account for the potentially large taxes that follow a sale. Otherwise, you might have an unpleasant surprise come tax season. 

In most cases, it’s best to seek some outside help. A consultant who specializes in the funeral industry can help your tax accountant and attorney best minimize your tax burden. 

Buyers Matter

Finding the right buyer for your business can be a challenging process, one that will ultimately depend on the current state of the market as well as your ability to leverage your network. In most cases, an ideal buyer will be one already affiliated with the funeral services profession.

The funeral profession is a small network and many of the buyers are known. How you engage with those buyers depends on a well-constructed marketing package, confidentiality, and a timely process. This will ensure your success to maximize your value. 

You may already have a buyer in mind, and that buyer would hope you would only talk to them. There are few buyers, if any, that would want to work with you indirectly through a broker. This is because they know they will have to pay more for the business. Ironically, all buyers would agree that a process that includes a broker is more organized, flows better, and is more timely to a close. 

In summary, to maximize value, more than one buyer needs to be involved and it must be a structured process. Keep in mind that the highest price may not come from the buyer you thought would pay the most. At Johnson Consulting, we like to have 7-10 buyers involved in each marketing package. We are continually surprised by who the ultimate buyer is, as opposed to who we thought the buyer would be. 

Work With Industry Experts

Selling a business is a complex process, the success of which will drastically impact your next steps in business and life. It’s essential to seek the outside expertise needed to execute a sale right. It’s surprising to see business owners who commonly use a real estate agent to sell their home, but not using an expert to sell the most valuable asset they own — which is their funeral business. 

If the industry expert does their job, they will increase the value which will accomplish two things: put extra money in the owner’s pocket and pay for the consultant without infringing on the value the owner receives. 

At Johnson Consulting Group, our team of death care professionals can help you through every step of the process, from obtaining a valuation, finding a buyer, and brokering an eventual sale. With our collective decades of experience in the field, our consultants, accountants, and brokers can help you plan an exit strategy from the ground up, aligning your goals with the potential of your business. 

It all starts by partnering with us. By conducting a holistic examination of your funeral home, we can help you determine where your business currently stands and what needs to be done before a sale. Reach out today to schedule a consultation.

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Multiples are based on a number of factors, including the specific industry as well as a business’s size and profitability. When you are considering what multiple to pay, it is the same as considering how many years of cash flow you feel confident you will receive from your purchase. It’s the number of years of cash flow you are buying.

In this guide, we’ll review the importance of multiples, how they’re assessed, and what’s considered a “good” multiple for the death care profession. 

What’s a Good Multiple When Selling a Funeral Business?

When planning to sell your funeral business, you’ll need to obtain a valuation, and during this process, the appraiser will determine a multiple range for your business. 

Multiples vary greatly by industry. In the death care industry, a multiple of six to ten is considered a good range for mid-to-large size businesses. However, this multiple will vary based on factors such as the current economy, lending rates, as well as the business’s case volume, market share, and historical trends. A business’s value is dictated by the level of opportunity and risk. The higher the opportunity and the lower the risk, the higher the multiple. How you demonstrate the opportunity and the risk depends on how well your marketing package and presentation is put together. 

How Can You Improve Your Multiple?

For many funeral business owners, improving multiples will be an essential step to take before putting a business up for sale. There are several proven ways to increase one’s multiple, and many of them dovetail with boosting a business’s valuation. 

Getting Regular Valuations

Getting regular valuations is an important step for any funeral business looking to improve its multiple. Valuations not only provide you with a top-down assessment of current performance, but they can also help identify areas of weakness in the business, which can then be addressed. 

When performed annually, valuations can track the progress of a funeral business over time and help establish realistic expectations for the company’s future. We often ask how often clients look at their investments in stocks/bonds/cash, most likely they are looking on a monthly or annual basis. Funeral business owners rarely look at their own business’ value, which is ironically the most valuable asset they own. 

Understand Your Financials

While some funeral business owners can tell you how profitable their company is, fewer can readily report the deeper financial picture. 

To increase a funeral home’s multiple, it’s essential for leadership to have a comprehensive understanding of the company’s current financial position and to be able to accurately interpret financial trends and performance. This includes clear and concise profit & loss/income statements, and balance sheets.

Set Goals for Growth

Setting goals for growth is also critical for improving a business’s multiple. By creating goals and executing a budget and plan to achieve them, your business can begin addressing any issues that caused it to obtain a less-than-ideal valuation. 

A good place to start this process is with a JCG performance analysis. Gathering key stakeholders and discussing the funeral home’s strengths and weaknesses in its 4 pillars of success is critical. By doing this, you can create a strategic plan that sets your business up for greater valuations.

Invest in Your Team

Payroll is the highest expense within your company, and it’s gone up at least 5-10% of net sales in comparison to recent years. Is your labor pool an asset or liability to the business’s success in the future? Bottom line: invest in your team.

Furthermore, higher turnover rates and employee dissatisfaction can hurt your valuation. You should implement strategies to recruit and retain top talent. In many cases, to optimize the performance of your teams, leadership may create incentive compensation plans that reward top performers within your organization.

Lean on Funeral Home Consultants

Improving the multiples of your funeral business will require extensive planning and years of execution. Your time is best suited to being active within the community and with the families you serve. 

We like to say an owner’s time is worth $1000/hour….Where are you best spending your time? What are the things you should be doing, and what are the things you should be outsourcing to the experts? In these cases, it’s logical to rely on the expertise of funeral home consultants. 

Johnson Consulting Group (JCG) is a leading firm specializing in the death care industry. By partnering with your leadership team, we can help you through every step of the way to improve your multiples, assist with exit strategy planning, conduct valuations, and provide brokerage services. 

The JCG team provides the outside perspective and industry expertise that allow funeral businesses to boost their multiples. Reach out today to learn how we can help.

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It would be an understatement to say the past few years have been unusual. A variety of factors indicate the U.S. is headed for recession, but it’s not here just yet. If you keep up with Johnson Consulting Group regularly, you know we speak about the business lifecycle often. This is important because regardless of any outside input, the business lifecycle is a constant. We always want you thinking about your business’s valuation and your exit strategy.

Securing a Succession Plan

We already know from prior research that many funeral industry professionals do not have an exit strategy or succession plan in place. JCG aims to fix that. With proper planning you give yourself the ability to shift and pivot as factors change and fluctuate, both internally and externally.

Consistently looking at the valuation of your business works hand-in-glove with your exit strategy to make it possible for you to execute the sale of your business at any time. Specifically, when the time is right for you.

Whether you’re interested in selling to a family member or trusted staff member, a solid look at your value is needed. The experts at JCG will consider all aspects of your business alongside the market and the most up-to-date tax regulations. We want you to have confidence in your planned exit and knowing the state of factors such as cash flow, your risks, and growth opportunities all fit into your valuation. Through these items you give your potential buyer a sneak peek into the realistic future of the business and potentially improve the profitability of your sale.

Perfecting Your Exit Strategy

Working on exit with the JCG team of consultants puts you and your goals at the front of the process. Our team will be with you for every step of this milestone experience. We will:

• Maximize your value
• Ensure your legacy is preserved
• Create engaging marketing to entice buyers quickly
• Carefully select only serious and qualified buyers
• Provide a seamless process through every detail

The exit process is lengthy and requires you to review and assess it often. So, while the immediate market conditions might not seem ideal, getting this process underway is important. The market is only one factor in the big picture of your business lifecycle. Don’t let fear of the unknown cause you to hesitate on the next steps for you and your business. We like this Inc. story about understanding your fears and how to plan broadly.

Funeral profession owners who sell with JCG realize 7-10% more in value than those who sell direct. We are the experts when it comes to making the sale of your business simple and easy.

Start planning with JCG today.

Sell your business with JCG!

The post Is it time to sell? JCG experts say, “Yes.” appeared first on Johnson Consulting Group.

Selling doesn’t have to be spooky

Thinking about your business exit strategy can feel like you’re walking in darkness without knowing what’s lurking around the next corner. Planning to sell your business doesn’t have to be so scary! Selling is just a part of the business cycle, and a little knowledge can go a long way in helping your feel safe when it comes to the unknown. With the right tools and expert guidance, there is plenty of light to brighten the pathway to your future.

Get going on your succession plan

When it comes to succession planning, the earlier the better. Putting together a proper timeline and a solid plan is the first step to a better future for you and your business. It can take time to thoroughly evaluate prospective successors to discover who is best suited to lead the business you have worked years to build. Assessing their aspirations and goals, as well as considering how well they will interact with future colleagues, clients, and partners can be a lengthy process, but it is well worth the wait to know your legacy will live on.

Time for an accurate valuation

There is no need to sell your business for less than it’s worth, which starts with an accurate valuation performed by a professional well-versed in the funeral home and cemetery services business. JCG’s experts have you covered. Even if you intend to sell to a friend or family member, properly assessing your business’s value is essential when it comes to market value distribution and transfer tax regulations. Your business’s cash flow, risks, and potential growth need to be assessed in order to give your potential buyers a realistic idea of profitability (and may even boost your profitability prior to sale). Knowing your business’s value allows you to exit with confidence.

Don’t settle for less than your hard work deserves

You want to feel good about your sale financially, but you also want to feel good about it on a more personal level. Once you know what your business is worth, use that knowledge and certainty to find and train the right successor. Don’t settle for less when it comes to money or the right leadership. This will take some time and effort, but curating a proper transition that takes your funeral home’s needs and goals into account is so important. Going this extra mile will leave you feeling confident not only about your exit but also about your enduring legacy.

Understand the tax implications of selling

A large part of financial assurance is having a comprehensive understanding of your business sale’s tax implications. Tax laws are complicated and ever-changing, so enlisting professionals who know the funeral home and cemetery business is especially essential at this stage of your selling preparation. Having outdated information or miscalculating an assumption can quickly lead to decreased profitability and even sabotage your sale. Know exactly what tax ramifications are on your selling horizon so that there are no chilling financial surprises in your future.

Ask the experts!

Regardless of whether you’re business sale is a decade away or creeping up quickly, it is time to bring in the professionals to help you put yourself in the best possible selling position. Be bold when it comes to your succession planning and your financial future, but don’t go it alone. Johnson Consulting Group is your partner in planning and is here to keep you safe and sound through all phases of the business cycle. Planning your exit strategy the right way and with the right professionals by your side can ensure your future isn’t haunted by bad decisions for years to come.

Plan With JCG

The post 5 Ways to Plan a Fearless Exit Strategy appeared first on Johnson Consulting Group.

Jake Johnson:

The demand for buyers was on the rise in 2021. More businesses considered selling due to the tax implications and high valuations. Business owners started seeing sizable valuations which led them to sell their businesses, resulting in savings due to income tax rates and depreciation recapture (paying back all tax benefits from depreciating).

As suspected with COVID-19, funeral homes were very busy. They were prepared as much as they could have been, but were largely slammed depending on where they were located around the US. Because the pandemic drew such a question mark for the world, the thought of succession planning, buying, and selling a funeral home and cemetery business was put on hold. While there were some divestitures, the trend slowed, and the curve grew. So now that we’re coming out of 2021, there seems to be a pent-up demand from buyers asking, “Where are the sellers?”

The funeral profession started digesting what was happening at the beginning of the pandemic and had little to no time to make shifts in their business. The change in taxes was a big implication as well. We are seeing more businesses considering selling and/or succession planning, the interest in valuations has been on the rise, and business owners are finding their businesses values to be higher than expected. People are calling Johnson Consulting Group curious about what they might be able to get for their business, and we are here to help.

Considering how sizable the recent transactions have been, if you’re looking to sell in the next 1-3 years, it’s a good time to do so. Owners who are deciding to sell this year-assuming taxes won’t kick in until the next year-are saving a great deal of money for two reasons:

1. Capital gain rates are going to increase
2. Ordinary income tax rate will increase, impacting businesses that sell their real estate and have depreciation recapture tax

Valuations are higher, especially for Johnson Consulting Group clients. For clients who have used our services, we’ve put them in a good position to have a sound strategy that not only gets them to their desired retirement finish line but increases the value of their biggest asset. Unfortunately, for some, 2020 distracted people from using these types of services.

What we can predict for the next few months and into the new year is that if people do not sell soon, they will just be faced with more taxes. Your business is your most valuable asset so if you’re planning your exit strategy, you need to take tax implications into account.

Selling a business is never simple. Debts, assets, liabilities, employees, and market trends all play into the complicated process of finding a buyer and sealing the deal. In the funeral profession, you’ll find some peculiarities that further complicate the process. 

This article was originally featured on Funeral Director Daily. 

The post Acquisitions: what 2021 taught us and what we can forecast appeared first on Johnson Consulting Group.

In our experience consulting, we’ve seen some common mistakes when selling a funeral home that ultimately impacted their bottom line in a sale. Here are some frequent errors and how to avoid them.

Mistake #1: Skipping Your Own Valuation

A valuation is an analytical process of discerning a company’s current or projected value. Most likely, when planning to sell your funeral home, you’ll want to conduct a valuation of your company to determine an asking price for potential buyers.

Before you begin the sales process, it’s imperative to know how much your business is worth so that you neither walk away from a great offer nor accept something too low. Often, funeral home owners assume that valuation is simply adding yearly revenue to liquid assets; however, the process is a bit more complicated. Only using these metrics leaves you at risk for undervaluing your business. 

To establish an accurate valuation of your business, you’ll want to consider the following methods:

• Comparing to Competition: The easiest way to determine the value of your funeral home is to find out the value of similarly sized businesses. Especially if you can find funeral homes in your area, this will give you an accurate range of where your business could stand in terms of value.

• Assessing Cash Flow: Another tried and tested method is to consider the actual revenue of your funeral home. By calculating how much revenue you make and multiplying it by 2.25 (the current industry standard), you’ll be able to express to potential buyers how much revenue they’re likely to earn.

• Considering the Buyer: Depending on where you’re located, the number of potential buyers might be limited. In these cases, it might behoove you to figure out what the buyer can afford by looking at how much they can borrow and how much debt can be offset by the funeral home’s profits.

Lean on Your CPA

For all of these methods, you’ll want to rely on an accountant who specializes in these sorts of transactions. A CPA with experience in the funeral industry, like those at Johnson Consulting Group, not only helps you consider your cash flow and understand your minimum debt ratio but also brings technical, numerical, and industry-specific expertise to the table. 

Mistake #2: Neglecting Market Consideration

You want your company to sell when it’s worth the highest amount possible to increase profit. The market is going to play a huge role in that. For example, during 2020, many funeral homes suffered their lowest profit margins in decades due to bans on in-person gatherings. During this time, those who sold their businesses made far less than they could have if they’d sold during busier period. 

When considering the market and its trends as they relate to the funeral industry, you should ask yourself the following questions:

• Which buyers will be interested in buying your funeral home, and what prices can they afford to pay?This will depend on both the size of your business, its location, and its profitability.
• How many calls do you get per year? Large corporations rarely buy funeral homes with under 250 yearly calls. If your business receives less than 100, you’ll likely only appeal to individuals.

• What kind of prices are people offering for funeral homes in your area? This will depend heavily on current interest rates. If they’re lower, then buyers will be able to take on more debt.

Mistake #3: Not Considering Your Reputation

While reputation is hard to quantify, especially in the eyes of a CPA, it’s important nonetheless. More so than other types of business, successful funeral homes are woven into the fabric of the communities they serve. If local families have trusted in your services, they will likely continue to do so, even if they haven’t called on your assistance in a couple of years. 

Additionally, local partnerships with florists, senior centers, and churches will be tied to your business’s name. If the market is taking a dip holistically, these connections will help your business rebound. For these reasons, reputation is an intangible asset that should always be considered.

Mistake #4: Passing on Help

The process of selling any business is complex, but this is especially true for a business that is reliant on its community and reputation. While the funeral home and facilities play a huge role, it’s really the people that provide the heart of your service through their emotional care and connections to your families. Because of this, it’s important you seek out the proper help when beginning the selling process.

It’s important to have partners by your side who have been in the industry for decades. As the largest broker in the funeral industry, Johnson Consulting Group has the experience necessary to get you the most value from the sale of your funeral home. Not only do we understand the industry and its potential buyers, but we’ve also the experienced financial professionals to make the process go seamlessly ensuring your funeral home’s legacy and helping protect the interests of those connected. 

Rely on Experts

The post Selling a Funeral Home: Top 4 Mistakes You Don’t Want to Make in the Negotiation Process appeared first on Johnson Consulting Group.

Be prepared

The best way to take uncertainty as it comes is to be prepared, and the best way to be prepared is by being agile. Like a well-trained athlete, your business needs to practice being nimble year-round so that it can boldly take on new and unexpected challenges. Learning not to sweat the small things when times are good will help you navigate rougher waters when times are tough.

It is not just the unexpected that causes waves, however. In an age of ever-evolving technology and social media, the standards that define your market can change quickly even in more predictable times. Playing old tunes for a new crowd simply may not work or may only work for a few. In the funeral services business, reaching only a few isn’t enough; the funeral services industry services all. It is a big, diverse new world out there and your business needs to meet each individual client where they currently are through agile thinking.

How to think differently

Different times call for different thinking. Adjusting how you analyze issues and plan for the future is not a one-and-done endeavor. Agile thinking is an ongoing, cyclical process. You can begin this process by adopting an AGILE mindset: Adapt, Generate, Invest, Listen, Engage.

ADAPT

Adapting is perhaps the most essential principle of agile thinking. If your business is not willing to change, it won’t progress. In order to continually fit in and thrive, you must be willing to adapt to the ever-changing market that surrounds you. A solid business keeps a flexible foundation that responds smartly to change.

GENERATE

Ideas and products and content and profits. Business is about generating useful, desired goods and services. Even companies with longstanding, iconic products, such as Coca-Cola and Apple, never stop to rest on their laurels. They succeed because they continue to create new and interesting things.

INVEST

Some might think of investing as throwing money in a mutual fund, sitting back, and watching it grow. However, “invest” is an action word, especially when it comes to your business. Investing in your business, your clients, and your market is an ongoing operation that, when done well, will continue to produce impressive returns.

LISTEN

With so much action ongoing, it’s easy to forget the more passive process of listening. A big part of taking action is also taking some quiet moments to listen, absorb feedback, and reflect. Business agility is only effective when you know where you need to be going and head in the right direction.

ENGAGE

Google, websites, SEO, blogs, reviews, Facebook, Twitter, Instagram, YouTube, LinkedIn, TikTok, Yelp. The list of engagement possibilities is so long that it can feel overwhelming. Deciding how to best engage your clients and potential clients is where the other four principles of agile thinking really come together. Listening to feedback, adapting to fit that feedback, and generating and investing in new directions allows you to engage in more meaningful ways.

Structure your agility

Many people think being flexible means not planning things out, but the reality of being agile is quite the contrary. Building business frameworks, like a solid budget and a thoughtful strategic plan, actually create the space for you to move more freely with the changing times. You are prepared to adapt when you have a plan to do so through responsive business structures and AGILE thinking. Keeping your business in shape and ready to roll with the punches makes whatever is lurking around that next corner much less terrifying.

Contact the JCG team today to learn how Johnson Consulting Group can help you plan your future.

The post Applying agile thinking to your business appeared first on Johnson Consulting Group.

Consider your next role

How do you see yourself after you sell your business? Are you off sipping cocktails in an exotic location without a care in the world? Are you still checking in from time to time, consulting but also enjoying some newfound freedom? There is no wrong way to move forward. Whether you want to leave it all behind or keep at least one foot in the door, knowing what you want your future role to be, if any, will help you find the right person to carry on your business legacy.

Weigh your timing options

With the effort you’ve put into building your business over the years, it only makes sense to put the same care into deciding when to let it go. There are many factors to consider:

• Your readiness
• Your financial status
• Access to retirement benefits
• Tax implications
• Market conditions

Determining when to sell is a big decision that could affect your sale price, your post-sale financial position, and even your buyer’s potential for success in continuing your business legacy. Be sure to bring in experts who deal with business sales on a regular basis and have the knowledge to help you choose the right time to sell.

Put your business house in order

Like selling a house, tying up loose ends and tidying up forgotten corners will set you up for a faster sale, elicit a higher selling price, and attract the perfect buyer. Even the best of the best need to do an extensive business audit before entering the marketplace. Finances, employees, client base, inventory, and other assets should all be scrutinized and organized prior to selling. Again, bringing in the fresh eyes of other professionals who can polish any less-than-perfect pieces will help lead you to the perfect buyer.

Tie it up with a bow

Once you have taken stock and evaluated your business, it’s time to let the world know you are ready to sell. Even the perfect business won’t find that perfect buyer without the right packaging and marketing. If you’re looking for a quiet, low-key sale, it’s still important to show potential buyers your business best. If you have already invested in professional, up-to-date marketing materials, you may be able to create a solid selling portfolio out of what you already have. If you are a bit behind in this area, now is the time to invest in creating the right face and voice to showcase your business.

Connect with your network

Most business-focused websites will tell you there are two types of buyers — financial and strategic. However, the funeral services profession also attracts a third kind of buyer — impassioned. Funeral professionals generally have a passion for people and providing comfort to those who need it. Impassioned buyers will also be looking for the financial and strategic advantages of buying your business, so it is essential to present both the tangible and intangible benefits.

Your buyer is likely already affiliated with the funeral services profession. Perfect buyer candidates include:

• Current and former employees
• Family members
• Colleagues
• Competitors

Connect outside of your network

Within your personal and professional circle is not the only place to find your perfect buyer. The next generation of funeral service professionals definitely won’t look like the last and may not even be interested in the funeral services business yet, so you may not recognize your buyer at first. Compassion, patience, dedication, diligence — drill down to which attributes and skills you believe make a great funeral services professional. Create a portrait of your perfect buyer and then work to match it with a real-world person regardless of current profession. Ideally, your perfect buyer will find you, but be ready to put the work in to find them should the need arise.

Help put the “success” in your successor

Your years in the profession truly mean something and give you the ability to help make your successor successful. This is your professional legacy, so take the time and make the effort to pass it along the right way by seeking out the perfect buyer.

Contact the JCG team today to learn how Johnson Consulting Group can help you plan your future.

The post Finding the perfect buyer for your business appeared first on Johnson Consulting Group.

As a leader, you certainly cannot risk losing that much value. Before time runs out, you should plan for the future of your career and your funeral home entity by finding the most deserving successor. Here are some of the things you should consider so that you can start succession planning early.

The timeline for the succession must be laid out in advance

Succession planning is a long, rigorous process that may take years. You can manage the time and effort that your team will spend by crafting a long-term plan with a realistic timeline.

Conduct active engagements with your executive team in planning and structuring the succession. As a team, you can create a realistic plan by considering the current projects and future goals of your funeral home operation. Afterwards, discuss a timeline that will encompass the selection and the training of the successors as well as the timeline for the turnover of roles.

It is not simple to select a competent successor

The next leader can dictate the success of your funeral home’s future. Thus, there are a lot of things that you have to consider before choosing a deserving successor. For some businesses, the leaders have to contemplate if it’s better to pass the role to a family member, an employee, or even to a buyer.

Moreover, it’s important for leaders to thoroughly evaluate prospective successors. Conduct discussions with different candidates and evaluate their strengths and weaknesses, financial needs, skills, and experience. You have to assess how well they can interact with their future colleagues, clients, and partners, and from there, how much growing they have yet to do. Most of all, you also have to consider their career aspirations and ensure that the role is in line with their own personal goals.

Proper successor training takes time

A leadership role is not merely given, it is earned. Setting enough time for prospective candidates to be trained for leadership is crucial. This period will help them slowly but surely accumulate enough skills and experience to understand and fit in the role.

Before you start training the successor, you have to curate the right development process based on your funeral home’s needs and goals. Apart from leadership skills, your successor must also be able to hone other competencies that are integral to your funeral home operation’s progress. You may be able to optimize this training process through the expertise of business analysts. Their background in business administration trains them to plan for the business’s continued and future success, all the while recognizing its potential and limitations. Business analysts can create strategic plans that successors can implement based on data, as well as identify resources that are necessary to make them happen. With the use of data, your company can identify the skills, knowledge, and strategies that your successor must master to ensure the continued prosperity of your business throughout the change in leadership.

Assess your business’ value before passing it to your successor

Succession planning is neither quick nor inexpensive. Once you pass your funeral home onto another person, you will also have to distribute its market value and abide by transfer tax regulations. Understandably, succession planning within a family is much more favorable for some business owners because it is a less complex and costly process. Funeral homes can be handed over from one family member to another as an outright gift or through Grantor Retained Annuity Trusts for better tax efficiency.

Before implementing the succession plan, business owners must consult with qualified financial appraisers to review their funeral home’s market position and finances. The business’ cash flows, risks, and potential growth must be assessed for the business valuation. This may also allow entrepreneurs to carefully assess which successor is profitable and efficient for the succession planning. Furthermore, you may also use the valuation as a guide in increasing your funeral home’s profitability before it gets transferred or bought by a successor.

Early planning leads to a graceful and profitable exit

People think succession planning is merely a part of one’s retirement plan. However, you shouldn’t wait for accidents to happen before you plan for the future. Make a graceful exit from your funeral home operation by ensuring that it will remain profitable and successful after you leave.

Consider succession planning as part of risk management. It is a type of insurance in which you and your team will invest time and effort so that your funeral home can meet its goals and earn profit both during and after you make a plan for the future. This will ensure that your successor will be able to maintain the legacy that you have cultivated for the business.

Time can either be your enemy or your ally when it comes to succession planning. This process may be tedious, but it ensures that the transition will be beneficial for all the parties involved. Most of all, early succession planning is a good business practice of a leader who simply wants the best for their funeral home and its people.

Article written by Cleo Wintringham for Johnson Consulting Group

Want to learn more about succession planning? Contact the JCG team today! 

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