SBA 7a loans will increase from a maximum of $2 million to 5 million. It will also eliminate the SBA guarantee fee through the end of the year!  See article below and call JCG today if you are looking for a loan…

Senate passes small-business bill

South Florida Business Journal – by Kent Hoover Washington Bureau Chief

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Johnson Consulting Group Announces Significant Acquisitions

Phoenix, AZ – Jake Johnson, President of the Johnson Consulting Group (JCG), the death care industry’s premier succession planning and acquisition specialist, has announced two large-scale corporate acquisitions. According to Mr. Johnson, “These acquisitions are significant, not because of their scale, but because they occurred in an economic environment when deals of this type are not suppose to happen. Many would be acquirers are experiencing difficulty lining up financing while others are pessimistic about the death care industry. None the less, buy using our proprietary analysis and marketing system, JCG was able to facilitate lucrative financial packages for both sellers.”

The Fuller Funeral Services, located in Naples, Florida, was founded by Mike Fuller in 1996. Fuller Funeral Service is the leading funeral and cremation provider in Naples performing approximately 1,800 funerals and cremations annually from four locations. The firm was acquired by Carriage Services. Fuller Funeral Services was represented by Johnson Consulting Group.

Palm Mortuaries and Cemeteries is the leading funeral, cremation and cemetery services provider in Las Vegas, Nevada with a market share greater than 50%. The firm performs approximately 6,700 funerals and 2,550 cemetery cases annually from eight funeral locations and five cemeteries. The Johnson Consulting Group represented Ken Knauss and family in the divestiture of Palm Mortuaries and Cemeteries to Service Corporation International.

Johnson Consulting Group, founded in 1998, provides business appraisal services to funeral home and cemetery owners nationally, often in conjunction with the formulation of succession plans. The Johnson Consulting Group team of financial analyst has assisted hundreds of death care business owners to sort out their priorities so as to allow them to make sound, long-term business decisions.

According to Jake Johnson, “We consider our role in assisting a family in the divestiture of their business as a significant act of trust. Our clients represent some of the largest death care businesses in the industry, both as sellers and buyers. Our team of recognized business consultants work with our clients to realize the largest selling prices for their businesses. The sale of a family business, when it represents their single greatest financial asset, is not a process that should be taken lightly, and should not be accomplished alone. It’s a one time deal that must realize its maximum potential.”

“Just as important as the selling price, is how much of that the seller actually keeps. The US and state tax codes are shifting as the country works its way through the worse recession in nearly a century. Understanding the intricacies of the tax codes as well as the seller’s priorities is what makes JCG the choice of knowledgeable death care business owners.”

For additional information about the Johnson Consulting Group, visit their website at www.johnsonconsultinggroupinc.com or telephone them at 888-250-7747.
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A funeral home owner needs to know much more than just “how we’re doing” at the end of the year.

In my 40-plus years of working with funeral directors as a management consultant, I have seen just about every description and method of “Accounting” used to try to keep track of a firm’s income, expenses and profit/loss. But accounting should be more than that. It should accomplish a much larger goal for the funeral business owner for it to be of ultimate value to him or her.

Many – maybe even most – funeral home owners should say simply that the value of accounting is “to see how we’re doing,” both as the year goes along and then to see how the year ended – up or down, with profit or with loss. Another way of stating this use of accounting would be to view the “history” of the business. The problem with history is that it is already finished! It’s done, over, past. There is no way to go back and undo what happened last month or last year.

The real value to a business owner is to use accounting to accurately plan and balance income and expenses to ensure a satisfactory profit year after year.

One of the great benefits of an accurate history, of course, is that we can learn from it. So what do you learn about your funeral business by an examination of your financials? And even more importantly, what do you do with your financials to utilize them as planning tools for your future business?

Here are some key questions to ask yourself:

• Is the information you get from your accounting source such that it provides all of the necessary information needed to accurately plan for a satisfactory profit year after year?

• Do you sit down at least 60 days before your new year begins to analyze your current and past years and plan for the upcoming year to ensure that your business will be adequately profitable?

• Does your accountant understand your funeral business in such a way as to (1) provide you with the necessary specialized funeral accounting, and (2) assist you in planning your profitability (before the year starts) so that income and expenses provide the needed balance?

It is not the intent of this article to provide the answers to these questions. But this is where I believe many funeral home owners miss out on very vital part of the accounting process. A firm with an accounting system that is not designed specifically for a funeral home operation, with the proper chart of accounts and experienced staff that can interpret the data and make insightful recommendations to strengthen the financials, is missing a wealth of opportunity. The monthly information from your accountant must be organized and presented in a timely way to take the necessary corrective action to get you where you deserve to be. If that is not your current situation, consider making a change. You owe it to yourself and the stakeholders in your business.

The profit climate in funeral service might seem to be rapidly declining; after all, every June for the past 29 years, the decline in funeral profit margins has been announced in glaring headlines. In 1980, the announced margins were about 14% and have come down steadily to less than 6% as of June 2009.

But these announced margins are not the same margins I have seen during the past 29 years of working with firms that have had funeral planning information properly presented by their accountants. Most of the well managed firms with whom I am familiar have consistently enjoyed profit margins (as a percentage of revenue) of at least 10% to 15% and above.

So, yes, good-clean-accurate accounting is important in providing information needed for tax preparation and also for establishing a line of credit with a banker or when there’s a need for financing. But the most basic use – the absolutely most important use – is for planning. In an accurate and timely manner, the right combination of income and expenses to provide adequate profits year in and year out. If you cannot use what you get or produce (internally) for profit planning from your accounting, then you need to search further until you find what you need. Do it now! Your accountant must have the knowledge and expertise to provide you with the guidance to achieve profitability.

Over the years, I have presented dozens of profit-planning workshops for funeral directors and have lectured to groups on both a regional and national basis. Almost always I start by asking the following question: “How many funeral home owners in this audience have calculated their cost of conducting a funeral?” I cannot remember ever getting a show of hands of more than 20% of the audience.

So the rhetorical questions follow: “How in the world can you accurately plan your pricing to be profitable when all you know about your costs is the casket and vault invoices? This profession is still about service, is it not?”

When you get your financials as the year progresses, you must not only examine what has already happened but get the answer to why your bottom line is up or down. For example, if you have a 300-call business and at the six-month point you have served 165 families, you already know your profit is going to be up! But that is not the point – that is the obvious. Does your statement identify exactly how much profit comes from those additional 15 families? Does it also measure for you whether your service charge is recovering the planned amount? If your casket average is where you planned, and if not, what is the dollar effect there? Same with your cremation average and your vault average, etc.

Too often, when volume is up, other profit centers are under performing, and because they are operating in the shadow of an up-volume year, no one realizes that part of the deserved profit is going up the chimney, never to be seen again.

Also, let us be clear about priorities when the same firm that does your taxes is also doing your accounting. I know tax season is very busy and stressful. But it does not mean – it absolutely cannot mean – that your accounting is delayed while taxes are done, leaving you operating in the dark about what is happening top and bottom line, receivables and cash flow. You can’t afford to operate one single day with your only financial knowledge being the balance in your checkbook.

Finally, does the accountant or advisor you presently retain understand the dynamics of funeral service planning backward and forward? With his or her help, do you also have a pricing and expense plan in place when your new year begins? If you get management advice and planning four or five months after the year starts, what good is it?

Now I know the question you’re probably asking: How in the world can I plan profit when my 200-call business has 180 calls one year and 220 another? Those who are experts in the “planning for funeral profits” area know and understand the answer and are more than willing to share it.

Today, most of us use a global positioning system to help guide us as we travel in unfamiliar territory. With a GPS, you know exactly where you are. Moreover, you know exactly where and when to turn a corner and whether to turn left or right.

An example should make things crystal clear. There are two airlines. Airline Number One takes off and “heads west.” Airline Number Two has a flight plan and navigation systems that tell the pilots in advance exactly where and at what altitude they need to be the entire 2,500 miles of the trip. Which of the two airlines would you select when going from New York to California?

The answer is obvious. There’s no guesswork with Airline Number Two.

So why should you guess about the profits your pricing will produce? Would you not want GPS accuracy in determining those profits? After all, it is primarily the profitability of your business that determines the value of your business when you are ready to sell it or pass it along to a family member.

It’s your bottom line and quality of life we’re talking about. The value of your business is ultimately determined by the way you manage. So ask yourself: Am I running my business with precision or am I just winging it? The answer makes all the difference in the world.

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Do you have a competitor that actively markets alternative cremation and burial businesses? (discount businesses)
Comments: 60% of those that responded said that they had a competitor that actively markets some type of discount business. This will be interesting to see if this percentage grows or declines with the economy and consumer preferences. Needless to say, but funeral professionals should actively review their value proposition to be sure both remain competitive in the marketplace.

Do you effectively compete with alternative services?
Comments: 73% of those respondents felt like they do compete well with those alternative business competitors. For the other 27%, I would be curious what is being done or if it is too late!

What steps have you taken to keep families that are shopping?
Comments: We had a wide range of comments, here were a few notables:

• Nothing
• Differentiate our services and try to build a relationship with the family
• PreNeed program
• Offer a reasonable price
• EXTREME personal service
• Match prices and sell our value
• Price shopper training and 10 minute call back
• What can you do to compete with $275 direct cremation!

Are you considering opening your own to compete?
Comments: 71.4% of the respondents said they did not plan on opening their own business to compete.

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1. Do you have a succession plan in order?
2. Is it current?
3. What is your age?
4. Do you have family members in the business?
5. Do you plan on transferring ownership to family members?
   1. Are they currently capable of running the business on their own?
   2. What are you doing to ensure that they will be if not now?
6. Do you have long time key employees in the business?
7. Do you plan on transferring ownership to your key employees?
   1. Are they currently capable of running the business on their own?
   2. What are you doing to ensure that they will be if not now?
8. What would happen to your firm if for some unfortunate reason you had an untimely death?
9. Do you have a current valuation on your firm?
10. Have you recently appraised your real estate?
11. Have you taken any steps to prepare your firm for transfer of ownership?
12. What kind of Corporation do you own? C-Corp, S-Corp, LLC, other?
13. Have you considered your tax consequences and what you keep from a transfer?

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As we predicted last year, 2010 has been a good year for those owners who felt they were close to succession to bump up their timing and go to market. First, and most likely, it continues to look as though capital gains rates will rise after December 31, 2010. Although many on both sides of the aisle have urged continuation of the “Bush Tax Cuts,” Congress has proven with the Estate Tax debacle that even when a failure to act will bring disastrous consequences, political gridlock can still cause inaction.

In addition, a quick return to prosperity looks increasingly questionable, as more economists admit that a double dip recession is more likely than previously thought. The combination of a slow economy and lower mortality rates have slowed many firms that previously enjoyed revenue growth year after year.

We repeat our advice, that any owner who believes there is a good chance he will transfer his business in the next five years, should begin now. Even if you do not put your firm on the market, completing the hard work to be ready to do so, with an understanding of value, management succession in place, good records, and other preliminary steps, will keep you nimble as these critical stories play out.

To summarize some background, the first risk factor is the likelihood of higher capital gains taxes based on legislation already in place. As the “Bush Tax Cuts” automatically expire on December 31, 2010, federal capital gains tax rates are set to go up 5% for most sellers. Whether that happens, whether the rates go even higher or whether the cuts are extended seem equally possible at this point. The battle will be between those who believe extending the cuts will help further the recovery and job creation, and those who feel higher rates on the job creators are necessary to close the exploding deficit and fund more government spending.

It now appears that the Boomer – led explosion in the death rate is also further away than predicted previously. The current declining or flat death rates may go on for another five years or more before we see an increase. Finally, lending continues to be tight for many individual purchasers, further reducing the options for selling owners. As the acquirers who can get credit find and acquire their targets, some will stop buying and focus on reducing that debt before going back into the market.

In short, most of our fears for an increasingly unsettled and difficult market for funeral home and cemetery sellers continue to look possible or even probable. If you are concerned about these factors and wish to be in position to move quickly as we get a better feel for 2011, you should consider starting immediately. (Click to contact)

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1. Measuring client family satisfaction: Make sure you prepare a survey that asks the right questions; survey every family served; and quantify all responses into a database that can provide you with performance reports by company, location and individual arranger.
2. Training staff: Make sure you are providing staff training on customer service, arrangements, telephone etiquette, and how to handle shoppers. Make sure you have established clear expectations, procedures, objectives, behaviors and practices for employees to follow for every facet of service you provide i.e. first calls, greeting families for visitation, making funeral arrangements, etc. These Service Standards or Best Practices need to be regularly reviewed, enhanced and carefully communicated to all staff.
3. Tracking arranger sales performance: Make sure the sales performance of each arranger is closely monitored with a detailed sales report that shows call volume, business mix and sales average of all sources of revenue.
4. Tracking arranger collections performance: Make sure you closely monitor each arranger’s ability to secure payment professionally, and on time.
5. Conducting regular staff meetings: Make sure you have regular communication with all staff with the primary focus being customer service delivery. Make clear that customer service is “Job One” and provide feedback on current performance using Customer Satisfaction Survey Reports. Additionally make sure you are meeting at least weekly with your key management group.
6. Monitoring Employee Morale: Make sure you annually survey your employees on their level of job satisfaction and practice regular employee communication and recognition.
7. Regularly reviewing your pricing: Make sure your price lists and pricing are consumer friendly; Your merchandising plan and pricing is effective; and your packages are useful and attractive to consumers.
8. Tracking Market Share: Closely follow market share monthly. Analyze historical market share as well to identify trends.
9. Making an annual operating budget: Make sure you are accurately projecting calls, mix and averages as well as knowing your precise operating expenses.
10. Using funeral industry specific accounting program: Make sure you are receiving timely, accurate financial statements and management reports that enable you to successfully run your business.

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Mark Musgrove – Musgrove Family Mortuaries and Cemeteries

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