If you think you might buy, sell, or pass your funeral business on to the next generation within the next 7 years, it’s time to start planning now!

Without a plan, you could face several challenges, including a lower sale price, a difficult transition to new ownership, staff turnover, and even the loss of your family’s legacy in the community.

In my time as a funeral home financing expert, I’ve assisted clients with the sale and acquisition of funeral home businesses, as well as refinances, additions/renovations, and buyouts (partner and generational). I can tell you from experience that sellers who develop and follow a good succession plan are able to pave the way for a smooth transition and, in a good number of cases, increase the value of their businesses. These funeral professionals are then able to go into retirement with confidence, knowing that they have successfully “passed the torch” to the new owner.

So, if you are nearing retirement or looking to sell your funeral home business in the near future, you may be wondering, “How do I start my succession plan?”

1. The first thing to consider is timing. It is never too early to develop a succession plan. There are steps that a funeral home owner can take, at any point, to prepare for the future. As a good rule-of-thumb, I recommend that the business owner begin seriously planning for succession at least 7 years from the owner’s targeted retirement date. This will allow plenty of time to execute steps to plan the succession, as well as maximize the value of the business.
2. Second, consider your options for choosing a buyer. A successful funeral home owner has built a high level of trust within their community. Great reputations and track records are not established overnight; it takes years of first-class service and a strong sense of investment in the community. As an owner considering “passing the torch,” it is important to identify a buyer who is equipped to continue the tradition of the funeral home. Potential buyers may include family members working in the business, long-term employees, other funeral directors or funeral home owners in the area, or a reputable regional consolidator.

3. Next, start growing the value of the business. Funeral homes are valued based on the cash flow that the business generates. As a business owner looking to sell, it is important to begin maximizing the efficiency and performance of the funeral home as an organization. To do this, consider expanding your preneed program, streamlining processes with upgraded funeral home technology, and looking into solid training for your staff on both the at-need and preneed side. As you probably know, families are changing and their needs are evolving, and as such, the funeral home staff needs to be able to adapt and adjust in order to provide families with the type of service they are looking for. As you can imagine, a solid track record of increasing call volume and a solid book of preneed business only serves to enhance the value of the funeral home.

4. Finally, create a plan that honors the legacy you have built over a lifetime. We have all seen instances where a funeral home that had been beautifully managed for 50, 60, or 100 years is sold to an individual or organization that mishandles the trust and legacy that has been built over generations. However, with good planning, you can find a buyer you trust to carry on your family’s legacy and provide the community ample time to grow accustomed to the transition.

Every single funeral home sale presents a unique situation, so the things that worked for one funeral home owner may not work for you. That is why planning is so crucial. My final piece of advice? Don’t do this alone. Work with an expert you trust who will help guide you through the process of succession planning because with a funeral home, there’s more at stake than just a typical sale. The entire community is watching and wondering if they can trust a new owner/operator to care for their loved ones just as you did for so long. Don’t let them down! FBA

Jason Gazaille serves as Vice President of Finance for Funeral Directors Life Insurance Company. Since joining the company in 2015, Jason has expanded his department services to include not only funeral home lending, but also a consulting services division – Directors Business Solutions – which offers accounting, payroll, and valuation services. Jason was instrumental in launching Directors Business Solutions, which helps funeral home owners streamline their financial processes and gain greater insight into their business through accurate and timely reporting. Jason is a graduate of McMurry University with a BBA in Marketing. To connect with Jason, call 800-692-9515.