While selling a business is undoubtedly an exciting decision, it’s one that can’t be made lightly. Once you sign on the dotted line, there is no going back––your funeral home now belongs to someone else. The business you’ve spent years––if not decades of your life––building from the ground up is out of your hands, and you’ll have to ask yourself if you made the right decision.
Did you know that 75% of business owners regret exiting their business? And it’s not all about the money. In addition to financial concerns, we often see funeral homeowners regret issues related to timing, their employees, and their greater sense of purpose. Luckily, all of these regrets can be avoided with a bit of proper planning.
1. Settling
When you’re selling a funeral home business, you’re going to receive offers, and much like a flea market or yard sale, you’ll undoubtedly receive lowballed offers. The key to choosing the right deal, however, is knowing which deals to consider and which to say no to.
Often, funeral directors see the sale of their business as a means to an end, quickly accepting the highest offer available; however, this overlooks your needs in the transaction. Before selling, you should ask yourself what you’d like to accomplish with the sale.
- What are your goals?
- Do you wish to keep majority/minority control?
- Are there personal financial goals you’d like to achieve?
- Do you plan to engage in the new owner’s education regarding your business?
It’s really about chickening out. Your funeral business does not have a set value; rather, it’s worth whatever someone is willing to pay for it. Taking time to assess this worth, free of the pressure to pull the trigger, will help prevent you from looking back post-sale and feeling as though you could have done better.
2. Treatment of Employees
Whereas the sale of national corporations often comes with little changes to the people they employ––apart from shifting change in command––small businesses like funeral parlors often feel greater loyalty to their employees. Especially for hands-on funeral directors, their employees become something of a second family, from the bookkeepers to custodial staff.
Therefore, selling a funeral business comes with the difficulty of letting go of people you once cared for so deeply. While a new owner will likely keep around most, if not all, of your existing staff, there’s no way to guarantee this.
One of the best ways to ensure that your employees are taken care of post-sale is to provide the new owner with organizational charts, job descriptions, and detailed reviews of all current workers. Often, a new buyer is immediately interested in cutting operating costs, which could mean slashing salaries or letting go of some workers altogether. By imparting the importance of each person’s role to a new owner, you increase the likelihood that their employment will carry on similarly.
3. Leaving Money on the Table
If money is a core motivator to selling your funeral home, then it’s important to really look at your finances and the potential for more revenue in the future. Ask yourself if now is the best time to sell or is there more business to earn that will also boost revenue and make your funeral home more appealing to buyers.
One metric to consider is the health of the economy overall. If the stock market and real estate market are doing well––particularly local markets––then you’re likely to get a better deal. If, however, the current state of affairs is similar to that of the 2008 recession, then it might be best to hold out if you can.
You’ll also want to consider your year-over-year numbers. If your profits have been continuing to climb, then it might behoove you to hold off on the sale. Many funeral business owners report selling their business at a low point only to find that in subsequent years its earnings and value continue to increase.
4. Losing a Sense of Purpose
When selling your funeral business, we cannot stress enough the finality of this deal, not only regarding your money and employees but also your future plans. Think long and hard about whether or not you’ll be happy without the connection you had to your business. Again, you should reconsider your motives for selling. Are you planning to retire, or do you just need a vacation? Do you have a plan beyond cashing out?
If you started your business from the ground up or––as is often the case in the funeral industry––a parent passed it down to you, then you likely hold a special attachment to your funeral home. Not only was it your workplace, but it was also like a child, one you raised for the better part of your life. Think carefully about how it would feel to let go of this child.
After selling their funeral business, many people report losing a sense of purpose. As the owner, you’re likely putting in more than forty hours per week into your business, and while this might sometimes feel stressful, many are surprised at the malaise that sets in.
The key to addressing this is to plan. Whether you wish to start a new business, move to Mexico with your spouse, or focus on your golf game, it’s important to direct the passion once reserved for your business into a new outlet. Otherwise, you risk enduring a sense of drifting.
5. Neglecting Taxes
As with any large transfer of money, the importance of accounting for taxes cannot be overstated when it comes to selling your business. Business sales are taxed based on your capital gain, meaning the rate will match what you pay on your ordinary income taxes. Not considering what this looks like is a major mistake.
This is where a skilled accountant can come in handy. The accounting team at Johnson Consulting Group not only knows the ins and outs of tax law, but they also have a deep understanding of the funeral profession. Seeking their counsel can help you save money and ensure that you’re abiding by local and national tax codes.
6. Not Talking to Experts
All of this is to say that selling a business is not a decision to take lightly. While the prospect of netting yourself hundreds of thousands of dollars––if not more––is exciting, selling your funeral business takes some careful consideration of your goals, your finances, your people, and your post-sale lifestyle.
At Johnson Consulting Group, we have a team of experienced business brokers with skill sets related to finances, accounting, and the process of acquisition. We work specifically within the funeral profession and have closed over $2 billion in transactions for other sellers, like you.
If you’re interested in selling your funeral business now or in the future, we can help you plan your arrangements to ensure you’re happy with your ultimate decision.