However, the allure of ownership should be approached with careful consideration. While the idea of having the freedom to set your own schedule and make decisions without supervision is appealing, there are inherent challenges. Being a good funeral director doesn’t necessarily equate to being a good manager, and similarly, good managers don’t always make good owners. It’s critical to recognize personal inadequacies and work on developing the skills necessary to succeed as an owner.

As Tom noted in his article, the journey from funeral director to owner requires a deep understanding of what ownership entails. It’s easy to look at the rewards of owning a business without fully appreciating the hard work required to reach that level. The climb to the top involves a great deal of learning, adaptation, and a willingness to let go of certain tasks in order to assume the broader responsibilities of ownership.

When exploring funeral home ownership opportunities, it’s advisable to memorialize any promises of future ownership in writing with a current owner. Without a formal agreement, there is little foundation to build on, and years of hard work might not result in an ownership stake. Aspiring owners should also be prepared to enhance their leadership and management skills through conferences and training programs, such as those offered by Johnson Consulting Group’s Leadership and Management Academies.

One of the current advantages in our profession is the availability of financing. With the right preparation, a bank can fund the purchase of a funeral home, allowing the new owner to pay back a loan over time while keeping the business for themselves. This is a key part of the American dream, but it requires thorough financial readiness, both in terms of savings and skill set. Aspiring owners must be equipped to manage debt and know when and where to seek assistance.

It’s important to remember that the learning process never stops. As an owner, others will look to you for answers, which can create pressure. But, it’s crucial to continue growing and seeking support when needed.

Looking at the next generation, there’s often a misconception that “They won’t work as hard as previous generations”. However, today’s business professionals are finding innovative ways to balance work and life. Through outsourcing, leveraging resources like associations and the internet, and using study groups, younger professionals are finding efficient ways to accomplish their goals without overworking themselves. In summary, it’s more about prioritizing balance and using the abundant resources available.

In conclusion, owning and running a funeral business isn’t for everyone, but it can be incredibly rewarding. The key to success lies in taking care of the families you serve…Period! If you can do that, they will take care of you. With the right preparation, support, and willingness to learn, you can enjoy the many benefits of ownership and establish a successful future for you and your family.

*This article was originally posted on the Funeral Director Daily website.

The post Opportunities in Funeral Home Ownership: The Path to Entrepreneurship in the Funeral Profession appeared first on Johnson Consulting Group.

Crafting a Strategic Financial Plan for Funeral Homes

Developing a robust business plan is the first step toward financial mastery in the funeral service profession. This plan serves as a roadmap, guiding your funeral home through budgeting, forecasting, and cash flow management. A well-crafted business plan showcases the viability and strategic vision of your funeral home.

Key Elements of a Financial Plan:

1. Budgeting and Forecasting: Establish clear financial goals and projections to guide your business decisions.
2. Cash Flow Management: Maintain a steady cash flow to ensure operational efficiency and sustainability. Consider using a thirteen-week cash flow analysis provided on a weekly basis.

Understanding a comprehensive financial strategy will enable your funeral home to provide essential services while maintaining financial health.

Balancing Empathy with Economics in Funeral Service

Funeral home owners face the delicate task of blending empathy with economic viability. Financial control is crucial in balancing these elements, ensuring that pricing structures are fair and transparent while supporting your business’s profitability.

Strategies for Balancing Empathy with Economics:

• Transparent Pricing: A key consideration would be placing your prices on your website. Also, utilizing phone shopping vendors to ensure you are not only in compliance but providing all options to families guarantees your transparency and compliance.
• Cost Management: Control expenses on essentials like caskets and services to keep operations efficient and families happy.
• Revenue Tracking: A detailed sales contract analysis ensures that you know exactly what the average sales are per case type along with the averages of the items sold within those calls. This ensures that your pricing is not only competitive, but that you’re recovering your pricing as a correlation to the average sale you’re receiving.

By combining compassionate care with sound financial strategies, you can offer meaningful services while maintaining a viable business model.

Sustaining Your Funeral Home Business

Effective financial control is key to sustaining a funeral service business. Strategic planning helps you adapt to market changes while honoring the emotional aspects of our profession.

Key Financial Strategies for Sustainability:

• Budgeting: Predictable costs ensure affordability for clients and stability for your business.
• Financial Forecasting: Prepare for industry trends and future demands in your market.
• Investment in Staff Training: Enhance service quality and succession planning which fosters client trust and loyalty.

A well-structured financial plan empowers your funeral home to meet customer needs with integrity, ensuring both dignified services and business longevity.

In Conclusion, crafting a strategic financial plan is the foundation of a thriving funeral service business. By focusing on budgeting, cash flow management, and balancing empathy with economics, funeral home owners can sustain their operations and serve their communities effectively.

*This article was originally posted in NFDA’s Financial Column.

The post Crafting and Sustaining a Funeral Home Financial Plan appeared first on Johnson Consulting Group.

Q: Which major tax provisions from the TCJA are set to expire at the end of 2025?

A: Individuals and families can expect tax increases, but for business owners, the most concerning provisions include:

• Loss of the Section 199A Deduction: This deduction, currently available to pass-through entities (such as S-corporations and LLCs), allows business owners to deduct up to 20% of qualified business income. When this expires, pass-through entities will lose a valuable tax-saving tool, potentially increasing the tax burden on small businesses and entrepreneurs.
• Loss of Caps on State and Local Tax (SALT) Deductions in High-Tax States: Taxpayers in states with high income and property taxes could face higher overall tax liabilities as the current $10,000 cap on state and local tax deductions disappears.
• Reversion of Capital Gains Tax Rates: Capital gains tax rates will revert to being determined by your regular income tax bracket. This means that individuals in higher income brackets may see a significant increase in their tax rate on long-term capital gains.
• Reduction in Estate and Gift Tax Exclusion: The current estate and gift tax exclusion of $12.92 million per individual will drop by nearly 50%, meaning estates valued over approximately $6 million will be subject to estate taxes. This change could affect many families planning to transfer wealth to the next generation, making estate planning a crucial step in the coming years.

Q: What tax strategies should funeral home and cemetery business owners consider as 2025 approaches?

A: One key strategy is to consider accelerating your income before the TCJA provisions expire. With capital gains rates set to revert to higher levels based on your income tax bracket, now is an optimal time to sell assets, take profits, or increase distributions. By doing so, you can take advantage of the lower rates now, reducing your tax liability compared to what it would be under future tax rules.

This strategy is particularly beneficial for those with capital assets such as stocks, real estate, or business interests that have appreciated significantly over time. Locking in current capital gains rates could save you a substantial amount in taxes before the rates increase post-2025.

Other considerations may be to reevaluate your business structure, either converting it to a C-Corp or an S-Corp to lessen taxes. It may also be an opportunity to increase contributions to retirement plans, investing in capital equipment, or exploring tax-advantaged benefits for employees.

The Importance of Timing in Succession Planning

When it comes to succession planning, the timing of a sale can have a significant impact on the value you ultimately retain. In the words of Jake Johnson, “It’s not what you get, it’s what you keep.” Even though the sale price of a business may remain the same before and after 2025, the amount you keep after taxes will change. This is due to the potential tax increases that could arise when the TCJA provisions expire.

Q: How should funeral home and cemetery business owners approaching a succession plan think about the timing of a sale?

A: If you’re considering transferring your funeral home or cemetery business, now may be the optimal time to maximize the value of your business. With the potential tax increases on the horizon, selling before the end of 2025 could result in you keeping more of the proceeds.

“It’s just food for thought and something business owners should be aware of,” Jake continued. “If you were planning to sell around 2025, the tax changes might push you to reconsider your timing. Even if you’re not quite ready to sell, it’s worth considering whether selling now could help you avoid a higher tax bill later.”

The core idea is that waiting until 2026 or 2027 could mean a larger tax burden, requiring your business to make up the difference in growth or additional calls on capital. By transferring before the end of 2025, you may be able to capture a more favorable tax position and keep more of the proceeds from the sale. However, it’s important to remember that not everyone will be ready to sell at that time, so planning ahead and discussing options with a tax advisor is crucial.

In conclusion, with the expiration of these TCJA provisions on the horizon, proactive tax and succession planning are essential, working closely with a financial advisor will help you craft the best strategies to minimize your tax burden.

*Johnson Consulting Group and its affiliates are not tax professionals. You should review the content of this article with your tax professional to see how it applies to you.

The post Tax Changes Looming: What Funeral Home Owners Should Know appeared first on Johnson Consulting Group.

Succession planning preserves an organization’s legacy, ensures smooth leadership transitions, and nurtures internal talent. It is vital to the long-term success of any and every funeral home.

About Johnson Consulting Group:

Johnson Consulting Group is dedicated to providing comprehensive business solutions and tools to achieve heightened performance, profitability, and success within the funeral and cemetery industry. Our expert services encompass Succession Planning, selling funeral homes and cemeteries, financing solutions, business coaching, accounting services, funeral business performance analysis, customer survey programs, Customer Experience workshops, incentive compensation plans, and Leadership and Management training.

The post A Brush With Death: Funeral Succession Success appeared first on Johnson Consulting Group.

• When to retire.
• Who is next in line for funeral home management?
• If you want to continue being involved.
• When is the right time to sell?
• Who is the right person to take on the legacy?
• Is my current succession plan up-to-date?
• What happens if I, or a key figure, unexpectedly pass?  

We deeply understand the profound impact the untimely loss of any key figure can have on family-owned business. The question becomes even more critical: How can funeral home and cemetery owners thrive after the unplanned departure of a key figure? In smaller establishments, where the principal operator often wears multiple hats, from daily operations to public representation, the challenges magnify. The public’s confidence in the business’s continuity may waver following the loss of a prominent figure. At Johnson Consulting Group, drawing from over 600 years of industry expertise, we comprehend the intricacies involved in such transitions.

Complicating matters are the well-intentioned yet diverse pieces of advice survivors receive. The dynamics shift dramatically, especially when partners find themselves in business with the deceased’s spouse, who may lack practical experience. We’ve witnessed firsthand the potential pitfalls and family conflicts that can arise in these situations. This is why funeral home succession planning is paramount. We’ve assisted numerous families in navigating this process, emphasizing the importance of evaluating which aspects of the business survivors can effectively operate. Quality often surpasses quantity, as a smaller, well-managed business stands the test of time, while larger, weaker enterprises may face financial challenges.

Looking beyond the immediate challenges, it becomes imperative to consider the next generation of funeral home owners and funeral directors. Ensuring a seamless transition to capable hands is not only a strategic business move but also a commitment to upholding the traditions and values that define your establishment. Cultivating the skills and passion of the next generation is an investment in the longevity of your funeral home management and business in general.

This leads us to a pivotal point often under-prioritized in strategic planning and the lead-up to the sale of a funeral home business – recognizing the crucial role that next-generation leadership development plays in succession planning, business growth, and enterprise value. Without an intentional plan of action, the skillsets of next-generation owners or leaders will not develop or improve on their own. Acknowledging that being a good funeral director does not necessarily equate to being a good manager or business owner, we advocate for the creation of a comprehensive plan that provides ample opportunities for skill development.

Consider looking beyond the confines of your organization for opportunities such as management coaching or participation in distinguished leadership and management development programs. By investing in the professional growth of your next-generation leaders, you not only enhance the long-term success of your business but also elevate your funeral home management and the overall value of your enterprise. At Johnson Consulting Group, we deeply understand the intricate interplay between succession planning, business growth, and leadership development. We stand ready to guide you through these critical aspects, ensuring a prosperous and sustainable future for your funeral home.

GET IN TOUCH TODAY

The post Elevating Your Legacy: Strategic Succession, Growth, and Leadership Excellence in Funeral Home Management appeared first on Johnson Consulting Group.

As part of your year-end planning, you’ll want to revisit the salaries of your team members and ensure they’re being paid a competitive rate. Since most employees expect a yearly raise of some sort, you’ll also want to account for additional monies being spent in this manner. Potentially, you might even recognize high-performing team members with promotions. 

While it might seem unnecessary to give out compulsory raises to everyone, these yearly raises are an important component of employee retention. Some studies show that to replace an employee, it costs roughly six to nine months of their salary to recruit and train a new person. 

For example, if a team member is paid $80,000, you can expect to pay about $40,000-$60,000 in recruiting and training expenses. In light of these numbers, a standard raise of about 5% looks much more appealing, especially if you’re pleased with a team member’s performance.

Marketing

Unless you want your business growth to stagnate, then you’ll need to develop a marketing strategy that not only retains current customers but also attracts new ones. While you won’t necessarily need to hire a full-time marketing manager, you’ll definitely need to allot for marketing-related expenditures. 

For starters, this will likely include managing or (if you haven’t already) creating a website for your funeral business. Here, visitors will be able to find contact information for your business, as well as a variety of informative posts that establish trust with your brand. 

Additionally, you might consider conducting market research in the form of sending surveys to your families. By obtaining feedback from prior clients––even if only a fraction of them respond––you’ll gain valuable insight into where your business excels and where it needs to focus. 

One cost-effective way to administer these surveys is through digital platforms. The Performance Tracker X from J3Tech is a software solution built specifically for death care businesses. With this tool, you can create digital surveys, send them to families via email, and automatically track their responses. 

Business Growth and Improvement

A large portion of your funeral home’s strategic budget planning should be set aside for business growth initiatives. Anything that will improve your business and make it better or more profitable will fall into this bucket.

This might include investing in new technology that improves customer experience, adding new services like green burials or cremation, or even renovating your facilities. To figure out where to focus your efforts, you’ll want to rely heavily on feedback from families, as they’ll likely be able to provide you with key insights related to your services. 

Additionally, on the back end of things, you might consider investing in training for your team members. Particularly when it comes to your high-performing employees, helping them acquire new skills will allow them to take on new responsibilities (adding value to your business) while further engaging them with your workplace. 

Johnson Consulting Group, a leading death care consulting firm, offers a variety of personalized training courses for leadership and management skills. While these courses do cost money, the results will be well worth your investment. 

Plan for Success With JCG

Oftentimes, business owners don’t know where to begin when it comes to yearly funeral home strategic planning. Particularly if your business is running well and seeing year-over-year profits, it might not be obvious where you should focus your attention. In these cases, it’s often helpful to seek the guidance of consultants. 

At Johnson Consulting Group, our team of death care consultants has worked with funeral businesses at all stages in their life cycle. Through a combination of experience and business acumen, our team can partner with your leadership, identify opportunities for improvement, and create a strategic plan––one that is budgeted to a T.

The key to a successful 2023 is having a plan in place before the prior year ends. To get started, give JCG a call.

The post 3 Areas to Prioritize In Your Budget Planning for End Of Year Planning appeared first on Johnson Consulting Group.

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.

Whether your business needs some extra cash now or if your business is looking to grow, accelerated depreciation could be the bookkeeping tool you need. In this episode of the “M&A Minute” video series, Jake Johnson, President and CEO of Johnson Consulting Group, talks about how utilizing accelerated depreciation could help launch or grow your business.

What is Accelerated Depreciation? 

“Accelerated depreciation is basically the idea that you depreciate assets more NOW, and less later, so that you have less taxable income right now,” says Johnson. This is especially handy for new business owners, or businesses with short-term cash flow problems. In short, if you write off high-valued assets sooner rather than later, the faster you can claim tax deductions. 

When is This a Good Tool? 

As with all good things, there is a down side to accelerated depreciation. If you’ve used your extra dollars to re-invest in your business to make enhancements, you’ll end up having to pay the taxes you’ve deferred later on–or when you sell. This is called depreciation recapture. 

Here’s a few examples of how accelerated depreciation is a good idea: 

1. If your business is young and needs extra cash now 
2. If you’re not thinking about selling your business in the near future 
3. When you have new assets that are high in value, especially when you use them immediately after purchase 

The Johnson Consulting Group team is uniquely prepared to help you create a rewarding succession plan that preserves your firm’s legacy. Contact us to learn why now could be a good time to sell a funeral business, and ensure a smooth transition to retirement.

Jake Johnson and the Johnson Consulting team created the M&A Minute to help business owners through the process of buying or selling a business. The M&A Minute utilizes Jake and the JCG team’s knowledge to give advice that helps individuals feel confident and at ease when going through one of the most important times of their lives, selling or purchasing their most valuable asset. The M&A Minute is released every other Thursday. You can watch episode 9 now. Follow us on Facebook, LinkedIn, and Twitter to get M&A Minute updates.

The post M&A Minute Recap: Episode 17 appeared first on Johnson Consulting Group.

In the latest episode of Jake Johnson’s (President of the Johnson Consulting Group) “M&A Minute” video series, Johnson talks about the top 5 things that can affect the value of your business. 

Labor Mix

It’s important to have hard-working and passionate employees in your corner. A successful business is run by people with a variety of skills, experiences, and knowledge that comes with how long they’ve been employed. “A strong business has a multigenerational staff with varied talents and co-workers who cross-train to share skill sets,” says Johnson. If a business is being inherited then it’s important to have a strong team to manage the day-to-day. 

Size of Your Business 

“A business that brings in many millions of dollars per year is worth more than a smaller business,” says Johnson. While this is true, it’s important not to devalue smaller businesses. Depending on market conditions, local demand and competition, it may be easier to sell a smaller business. 

Location

Location, location, location! It’s all about real estate. Just like the housing market, it’s important to understand that the geography of a business directly impacts the value. In order for a business to flourish it’s important to be located in a populated area with opportunity to succeed. “This varies from state-to-state, but even regionally, business locations can be graded on their location,” says Johnson. 

Interest Rates 

When interest rates are low, a buyer can pay more for a business. This is great for both buyers and sellers. Low interest rates means there is a greater pool of potential buyers who can afford more properties. 

Credit Ratings 

Credit scores and ratings are extremely important when it comes to valuing a business. When lenders are willing to let you borrow money, that means the business has been run well, and it’s lucrative enough to pay bills on time. This is why it’s so important to make sure your house is in order prior to thinking about selling your business. Johnson Consulting Group has expert consultants who can help you grow your business or plan your exit strategy. Check out our blog that talks about planning your exit strategy.

Jake Johnson and the Johnson Consulting team created the M&A Minute to help business owners through the process of buying or selling a business. The M&A Minute utilizes Jake and the JCG team’s knowledge to give advice that helps individuals feel confident and at ease when going through one of the most important times of their lives, selling or purchasing their most valuable asset. The M&A Minute is released every other Thursday. You can watch episode 9 now. Follow us on Facebook, LinkedIn, and Twitter to get M&A Minute updates.

The post M&A Minute Recap: Episode 16 appeared first on Johnson Consulting Group.