During the consolidation of the 1990’s, the term “Succession Planning” became a euphemism for selling your funeral home or cemetery to SCI, Loewen or any one of a dozen other firms whose primary mission was to acquire companies. Succession planning became the well-known code name for “I’m about to sell my firm to one of the consolidators.”
And so it is still often thought of today as many “commission-based” business brokers use the term when what they really want for their client (and themselves) is to sell to the highest bidder. There is nothing wrong with that if money is your only motivation. But when looking at the reasons for succession planning, money and financial gain is not everyone’s motive.
A succession plan is much more than an exit strategy. We all know that during one’s professional career, a business must provide a better than average living. What some don’t think about until they are close to retirement is that it is also supposed to enable you to build wealth. True succession planning, implemented early, empowers the building of wealth by benchmarking your business against that singular litmus test: What would someone else pay for my funeral home or cemetery? Knowing that answer focuses you on those things you must do to build wealth for your future.
Succession plans are also designed to ensure that funeral homes and cemeteries survive and prosper when their current owners are no longer in charge – because they either retired, met an untimely death or suddenly unable to work.
Some owners avoid succession planning for much the same reasons that so many delay writing a will or, for that matter, making and funding funeral arrangements. Having devoted a great deal of their lives building the business, some funeral home and cemetery owners are reluctant to face the fact that they must hand over the reins at some point.
There are as many destinations for succession planning as there are ways to accomplish it. It all depends on your needs and personal goals.
Throughout our work as advisors, below are some common goals we often hear cited:
◆ Cash out for the best price
◆ Plan and provide for comfortable retirement
◆ Enable the firm to transition to heirs or employees without
hobbling it financially
◆ Taking care of children who choose to find a career elsewhere
◆ Planning for succession in a blended marriage
◆ Buying out a partner
◆ Join a regional acquisition group
◆ Continue to serve families but have someone else worry
about the administrative issues
◆ Simply wind it down
With succession planning, every situation is different… in some way. Every situation is personal. There are often similarities from one circumstance to another but always differences. As you might expect, cookie cutter solutions for transitioning the business don’t really solve problems.
We have found that it is rare that any given engagement will demand the expertise of a single business discipline. Much like your own customers – your families, owners ask questions when discussing succession planning, but more important than those stated questions are the “questions-behind-the-questions”.
→ How will we preserve our legacy?
→ How will we take care of loyal employees?
→ How can we get my son / daughter up to par on their
→ What do we need to do to remain relevant to today’s
For any given succession planning situation, the need may arise for expertise in law, funeral home and cemetery management, finance and accounting, family conflict resolution, innovation and strategy. A skilled advisor can quickly assess issues, develop multiple solutions that enable single proprietors or partners and family groups reach equitable solutions.
As you work thorough the succession planning process with your advisor, these services may be required:
• Estate Planning
• Financial review
• Work out plan
• Family and / or employee succession
• Sale to 3rd party
• Turnaround counseling
• Strategic plan
• Access to innovators in the profession
On the topic of advisors, it’s important to select one that’s not predisposed to a given solution or outcome. Many of these firms may have “hidden agendas” and just want to sell the firm to the highest bidder. Look to an advisor that will remain independent and employ their professional skills and exhaustive industry knowledge to discover, develop and deliver an actionable plan that meets your needs and not theirs.
This plan should offer recommendations on how to transfer successfully your business to family members, key employees or third parties. Once the plan is received, you can file it away; start the succession process with the help of local resources, or continue to use the business advisor to take the necessary steps to continue the succession process and add value and/or prepare for the succession.
Succession planning simply begins with the realization that your involvement isn’t going to last forever. Once that bridge is crossed, the rest is easy. When feasible, it should be started as early as possible…like when your children are still in diapers. One axiom that prevails in succession planning is – The earlier you start, the more options you have.
We’d like to close with the words of poet and novelist James Joyce that are as simple to understand, as they are to practice: “I am tomorrow, or some future day, what I establish today. I am today what I established yesterday or some previous day.” FBA
Alan Creedy and Bill McQueen have recently aligned to form Succession Planning Associates. This joint venture leverages their distinctive professional skills and exhaustive deathcare knowledge to discover, develop and deliver an actionable plan to transfer successfully a firm’s business to family members, key employees or third parties. More information can be found at www.successionpa.com. Alan is the president of Creedy & Company, a Business Advisory Service he founded in 2008. For more information, visit www.funeralhomeconsulting.org. Bill is a founding partner of McQueen & Siddall, LLP, a personal and business legacy law firm. For more information, visit www.mcqsidlaw.com.