Managing and operating a successful funeral home is certainly not for the faint of heart, so when it comes time to transition the business, it may be difficult to put together a succession plan for something that represents your life’s work.
Serving as a funeral director requires dedication, compassion and the willingness to work odd hours and be on call around the clock. Oftentimes, it is not only your full-time job, but it also becomes your whole family’s way of life, especially if you privately own and operate your business. According to the National Funeral Directors Association, nearly 90 percent of funeral homes in the United States are privately owned by families or individuals, so what happens when you would like to transition your business to new ownership? In this post, we share six tips to consider when selling your funeral home business.
1. Assess your motivation and goals for selling
Are you facing significant burnout and looking for a career change? Maybe you’re at the age of retirement and looking to slow down. It’s crucial to understand your reason for selling the business and set a goal and measurable objectives for how you foresee the transition will take place.
Understanding your objectives and setting clear goals will help you make informed decisions throughout the process based on data rather than emotion.
2. OUTLINE YOUR SUCCESSION plan
Putting together a comprehensive succession plan is a key component of transitioning your funeral home to the next generation, ensuring that the business you’ve built up will continue to serve your client families, even long after you’ve turned over the reins to someone else.
According to a recent study commissioned by Homesteaders, more than a third of funeral home owners are over age 60 and two-thirds of funeral home owners do not have a succession plan in place. Establishing a succession plan and identifying the next steps sooner rather than later will give you the upper hand when negotiating the details of the transition.
It’s important to give yourself enough time to plan for your transition, and starting the process well in advance prevents you from feeling pressured into accepting the first offer simply because you’re ready to be done.
3. get your business finances in order
As the saying goes, it’s important to “get your ducks in a row.” To attract serious buyers, ensure that your funeral home business’s financial records are in order so you can represent all assets, liabilities and business income accurately. Typical financial documents important to buyers include your profit and loss statement, tax returns, cash flow statements and a detailed inventory of assets included in the sale.
4. turn to the experts
Selling and transitioning your entire business is a daunting and complex process that often requires financial, real estate, business and legal expertise. You will want to put together a team of experts you can trust to help you throughout the process, with everything from determining the fair value of your funeral home and attracting potential buyers to preparing contracts and negotiations.
Consider hiring a business appraiser with expertise in the funeral industry and your specific area who can estimate the value of your business. You’ll also want to hire a business broker or real estate expert to advertise and execute the sale, an accountant or tax professional to give you guidance on smart financial decisions and an attorney to review contracts and protect your interests.
5. identify and screen potential buyers
Perhaps you already have identified a current employee as a potential buyer, or possibly you have leads from other industry connections. Regardless of how you choose to identify potential buyers, it’s important that you feel comfortable with and confident in the person taking over the business you’ve poured your heart into for so many years.
Not only will you want to verify that they are financially qualified to complete the purchase, but you’ll also want to determine whether they are fully prepared to own and operate the funeral business. Consider requesting background checks, a list of references and financial statements from potential buyers to assess their credibility and commitment to the acquisition.
While you wait for the sale to be completed, you’ll also want to ensure the funeral home’s reputation remains intact and client families continue to receive the level of customer service — or better — they’ve come to expect. It may be worthwhile to conduct interviews with potential buyers so that you can feel satisfied with their intentions for the business.
6. support the new owner during the transition
The best way to facilitate a smooth transition for yourself, your staff and the new owner is to provide continuous support while stepping away from the business. Consider remaining on staff to help provide training and guidance or offer your services as a consultant to ensure the same level of quality service and care is given to your client families throughout the transition.
It may be challenging to turn over the business, but ensuring that the funeral home’s future is in good hands with the new owner and staff will help you step away when the time is right.
Stepping down from operating your funeral home business can be difficult; however, it’s important to take some time to reflect on the success of your business and your career in the funeral industry and embrace the possibilities that lie ahead for you. Once you’re ready to sell your funeral home business, remember that a successful sale is the result of careful consideration and thoughtful planning.
What are some strategies you plan to implement when it comes time to sell your funeral home? Have you started putting together a succession plan for your business? Share your answers in the comments below.