November 2009 Management Insights Newsletter
November 25, 2009
From the Chairman’s desk:
Welcome back. Happy Thanksgiving. It’s truly a time for us to give thanks for our families, friends, associates and all the blessings bestowed upon us. We, at Johnson Consulting, are very fortunate to have the many clients and friends that we work with each day and throughout the year.
Our year has been a very busy one. We relocated our corporate offices to give us additional space to better serve our clients and make room for our product enhancements and some new innovative products that have been well received in the marketplace.
We are very fortunate and excited to have added three widely recognized individuals as new associates to the Johnson Consulting Group: Alan Creedy, Rich Sells and Manny Francisco. Rich and Manny’s highly successful careers in pre need funeral and cemetery marketing and operations have given us the opportunity to expand our services in this area. Our first client is a large cemetery operation in Mexico.
2009 has been a very interesting year for us in funeral service. Our economy has had some effect on average funeral value. Cremations are still increasing. Credit is beginning to loosen up, but not back to where it needs to be. Our new Loan Sourcing Program has helped several of our clients. We had an excellent year in our M&A division, but it came more from quality than quantity. And then there is Wal-Mart entering the casket business. If they win, we only have ourselves to blame.
A few issues ago, we added a survey to our newsletter and we received an excellent response from our first one. Last issue we ask just one question: “This summer our nation lost two very influential and trusted public figures, Walter Cronkite and Ted Kennedy. We ask you: Who, in your estimation, is the most influential living person in the funeral service industry today?”
I must be candid: our responses were underwhelming to say the least which may have said a lot. “I just cannot think of “the person” The one that got the most votes was nameless but a very powerful and influential individual in our society: THE CONSUMER. We better all listen to what they are saying.
Since we are fortunate to have a large subscriber list that is made up of both funeral home owners and associates as well as suppliers, we thought we would ask you to respond to a few questions pertaining to the supply side. We will again make it short and easy to reply. We sincerely appreciate you taking the time to respond.
As we begin to close out the year 2009 and put it in the record books, my perspective will be that it was a challenging, but productive year. We worked with several firms that made a commitment to change and make improvements to their operations. Their potential worst of times turned into much better times and for them the best is yet to come. Doing more with less and doing the right things, right will make all the difference.
We hope you enjoy this issue …
Regards,
Tom Johnson
Chairman
Year end tax tips from our tax service partners
Johnson Consulting does not provide tax advice, but relies solely on the experience and expertise of:
Tax Services
As the year end approaches, now is the time to start planning for your 2009 income taxes. Conventional tax planning calls for deferring income into 2010 and accelerating tax deductions into 2009. However, these are anything but conventional economic times. With large federal deficits and an expanding federal debt, we see increased tax rates in the future. The only question is how high and when will these tax increases take effect. Much will depend on how the economy performs in 2010. If the economy continues to struggle in 2010, we feel that the tax cuts scheduled to expire at the end of 2010 will simply be allowed to expire. However, if the economy improves during 2010, we think that we could see increases as early as 2010.
Most taxpayers have thus far experienced lower taxable incomes in 2009. Many taxpayers have large capital losses generated in 2008 that are being carried over to 2009. Investment income in 2009 will most likely be lower. This means that for many taxpayers, their marginal tax rates will be lower in 2009 than they expect to have in 2010. Therefore, it may make sense this year to accelerate income into 2009 and defer deductions into 2010. When looking at any tax strategy, the alternative minimum tax should be considered. Continue Reading Funeral Home Tax Tips>>>
Feature article
Johnson Consulting highly recommends that you survey your families that you have served. It is a gold mine of valuable information that will help you formulate your marketing plans and strategies….
2010 – THE BIG QUESTION – “DO WE REALLY KNOW WHAT IS GOING ON?” Todd Van Beck
This is a powerhouse of a question for funeral service and cemetery work. Do we really know what is going on out in the world? Of course we do, certainly we keep tabs on how the community is changing, we keep our fingers on the pulse of the funeral/cemetery environment; of course we do, been doing it for years.
These responses are predictable and totally natural and understandable. However they do not answer the question – do we know, really know what is going on out there? It might be that we don’t know precisely the details, and the realities, and nay the unpleasant news that might be, could be, and is most probably is floating around our communities about you and me.
Here is an example. I once had occasion to perform a focus group for a particular funeral home. Most everything was changing for this particular funeral home and unfortunately the owners were in psychological denial. In other words they truly and honestly “thought” they knew what was happening but in reality there were many gaps in their “knowledge” base. So they asked for a focus group. Continue Reading about the value of Funeral Home Surveys
Product Highlights for 2009 and What we will be featuring in 2010 ….
2009
1. JCGPerformanceTracker™ Web-Based Customer Survey and Sales Analysis Program
2. Accounting Services Growth
3. Management Service Growth
4. Expanded services in Preneed Consulting Through Rich Sells and Manny Francisco Coming on board
5. New Enhanced website with client portal
6. Introduced our Funeral Business Performance Analysis and Improvement Package along with Summary Strategic Plan
7. Busiest year ever at Johnson Consulting for Private funeral home acquisitions and divestitures
2010
1. Web-based client access and interactive menu for reviewing funeral business customer ratings and sales performance
2. Summit Meeting in early 2010 (March)
3. Johnson Consulting Group’s (Memorial Classic Golf Tournament in Las Vegas, NV)
4. Monthly benchmarking reports for our accounting clients (new enhancement to accounting)
5. Johnson Consulting Group funeral study group financial analysis package for study group’s wishing to make the most of their financial discussions
6. Expansion of the already extensive training library
From all of us to all of you have a great Holiday Season
Feature Article – 2010 – THE BIG QUESTION – “DO WE REALLY KNOW WHAT IS GOING ON?
November 24, 2009
Johnson Consulting highly recommends that you survey your families that you have served. It is a gold mine of valuable information that will help you formulate your marketing plans and strategies….
2010 – THE BIG QUESTION – “DO WE REALLY KNOW WHAT IS GOING ON?” Todd Van Beck
This is a powerhouse of a question for funeral service and cemetery work. Do we really know what is going on out in the world? Of course we do, certainly we keep tabs on how the community is changing, we keep our fingers on the pulse of the funeral/cemetery environment; of course we do, been doing it for years.
These responses are predictable and totally natural and understandable. However they do not answer the question – do we know, really know what is going on out there? It might be that we don’t know precisely the details, and the realities, and nay the unpleasant news that might be, could be, and is most probably is floating around our communities about you and me.
Here is an example. I once had occasion to perform a focus group for a particular funeral home. Most everything was changing for this particular funeral home and unfortunately the owners were in psychological denial. In other words they truly and honestly “thought” they knew what was happening but in reality there were many gaps in their “knowledge” base. So they asked for a focus group.
A focus group as most know is simply an elaborate survey of the attitudes and opinions of the community concerning a funeral home/cemetery operation. They are extremely valuable, but not used very much in this line of work – for a variety of reasons.
Before the focus group started the owner took me to dinner and with great confidence proclaimed that in “my town, my name is synonymous with funerals.” I sat quietly sipping my drink.
Family surveys, community focus groups, in fact any type of truly inside information that we a glean about our operations is today terribly important, in fact I can’t remember a time in funeral service when this importance was not greater.
Years ago most funeral homes had their clientele. That was it. The Catholics went here, the Protestants went there, the Jews went here, the rich went there and the poor went here, the Masons when there, the American Legion went here, and so on. It was indeed what the marketing guru’s call a “niche” market. Not so today.
The culture is and has been homogenizing itself for years, and make no mistake this social movement which units many different cultures, traditions, beliefs, mores, and folkways has had a tremendous effect upon funeral service. Because of the tremendous effect, focus groups and family surveys have emerged as the most economical, safest, and more accurate method for any operation to gauge just what is actually going on in their world instead of depending on speculation after speculation, random opinions, and finally idealized hopes and dreams which are not based in reality.
Here is a case in point. I have a good friend who is a manager of a large Jewish funeral home on the East coast. This firm has over a 100 year history of being the Jewish funeral home and is known throughout the United States. I took my friend to dinner in Manhattan one evening. In the course of conversation the issue of Jewish funerals came up, and my friend quickly shared this experience of reality which was happening in his very funeral home. He told the group that the greatest challenge to the future of Jewish funeral service was of all things inter-marriage between Jew and Gentile, and these unions in the next generation basically eliminated the firm connection that generations of Jewish families had towards this historically Jewish funeral home.
I asked my friend where he got this information from and he simply replied family surveys and random focus groups.
The information which is taken from such outside sources is indispensible for obtaining a true and realistic portrait of what is the state of the state of any funeral/cemetery operation. In fact the longer the survey the more accurate the information, and remember my friends when a negative survey comes in it means that 25 other people thought and/or experienced the same thing and said nothing – except to all their friends.
Surveys work. Focus groups work. Mystery shoppers work.
In tough economic times the two main expenses which are usually cut are advertising and training and education. While this is common business practice, the commonality of it does not equate into the practice being right or wise.
Training of the staff is essential to prepare for dealing with the future – they go hand in hand. Training of the staff improves what Dr. Deming called “invisible numbers.” You know things like being self-directed, autonomous, excited, dedicated, goal-oriented, practical common sense improvements. In bad economic times any business needs and should want this to happen instead of the opposite which actually can destroy morale, destroy loyalty, destroy commitment, destroy quality service, destroy, destroy, and destroy. Do we even need to give examples of this in recent United States business experience and history?
Training creates a new environment, an escape from the day to day. Training allows the staff to express deep feelings which are just as valuable to the future of the business as is any family survey and/or focus group. Training can be fun and entertaining.
In fact just last week, for the first time in my training career, I had an owner ask for a “fun” seminar. No doom and gloom, no end of the world FTC or OSGA stuff, no feat mongering, none of that old standard seminar stuff. This one was just light and fun. In fact I personally almost did not know how to begin because for 35 years most of the seminars I have presented appeared to be in the realm of funeral crisis management, when in reality the funeral profession chugged ahead in a mighty fine way with or without my deadly serious seminars.
The fun one however elicited laughter, giggling, shoulder poking, smiles, applause and a variety of real nice emails after the seminar was completed.
Training is basically the connection to the people, the vital people who make up the organization and in whose very breath the future of the organization rests upon. Possibly a funeral home/cemetery might survive without the umpteen thousand dollar Yellow Page ad very well, but without training – I personally would not take the risk. It is time and money well spent, for it all goes to people – our people.
Year End Tax Tips from Our Tax Service Partners
November 24, 2009
Johnson Consulting does not provide tax advice, but relies solely on the experience and expertise of:
Tax Services
As the year end approaches, now is the time to start planning for your 2009 income taxes. Conventional tax planning calls for deferring income into 2010 and accelerating tax deductions into 2009. However, these are anything but conventional economic times. With large federal deficits and an expanding federal debt, we see increased tax rates in the future. The only question is how high and when will these tax increases take effect. Much will depend on how the economy performs in 2010. If the economy continues to struggle in 2010, we feel that the tax cuts scheduled to expire at the end of 2010 will simply be allowed to expire. However, if the economy improves during 2010, we think that we could see increases as early as 2010.
Most taxpayers have thus far experienced lower taxable incomes in 2009. Many taxpayers have large capital losses generated in 2008 that are being carried over to 2009. Investment income in 2009 will most likely be lower. This means that for many taxpayers, their marginal tax rates will be lower in 2009 than they expect to have in 2010. Therefore, it may make sense this year to accelerate income into 2009 and defer deductions into 2010. When looking at any tax strategy, the alternative minimum tax should be considered.
On the estate tax front, the estate transfer tax is scheduled to expire at the end of 2009. We do not feel that Congress will allow this to occur. We think that the $3.5 million estate tax exemption and 45% tax rate in effect for 2009 will continue into 2010.
Taxpayers should remember to take advantage of the annual gift tax exclusion. The annual exclusion for 2009 and 2010 is $13,000 per donee. The exclusion applies to each donee. In addition, unlimited medical and educational gifts can be made on behalf of a donee provided the gift is paid directly to the medical provider or educational institution. Care should be taken when considering gifts made late in the calendar year. Time should be allowed for checks to clear the bank so that two years worth of gifts are not deemed to have been made in the same calendar year.
The one wild-card in the tax arena is health care overhaul legislation. Various health care plans have been proposed. We feel that some type of health care bill will be passed in 2009 or early 2010. It is still too early to determine how any new health care plan will be paid for and how this will impact tax rates.
If you have further questions, we would be glad to get you the answers…. Just give us a call
Tyson McLane says:
November 24, 2009
Most every family owned funeral home reaches a point in time when the owner generation needs a sound business plan to transfer the ownership to the next generation. That was our situation this year with our funeral homes and cemetery.
We called Tom Johnson who has been a personal friend for some thirty years. Tom and his team listened to us and assisted us in putting together our succession plan. They did a masterful job that exceeded our expectations. My son and I feel confident that our family firm is well positioned for the future.
When your firm reaches the point of ownership transition, give Johnson Consulting Group a call or call me first and I will be glad to share with you our success story.
Tyson McLane, McLane Funeral Services, Valdosta, Georgia
Kelvin J. Pennington says:
November 18, 2009
Jake, I am just getting back home from our Annual Managers Meeting and I just wanted to say that Todd Van Beck’s presentations were outstanding. It would take me too long in this email to fully describe how outstanding his presentations were. I am overly impressed with him. Where have you guys been hiding him? Anyway, I really appreciated finally getting introduced to Todd and using him for training. He is a home run. I absolutely would use him again in a future training opportunity.
Concord Funeral Homes
Richard D. Geib II says:
November 9, 2009
Dale:
I wanted to thank you once again for the recent work performed for our family. The business valuation assured me that things were fair, and in good order for all concerned, as I transfer the operating company to the fifth generation of the Geib family.
My good friend Harry, who made a career in large business operations, accounting, and consulting (and was also an economic advisor to the White House), told me that the Johnson Consulting Group’s written valuation was the finest he had ever read.
You have always been a friend and mentor, and have fulfilled your role in your usual upstanding manner. You are certainly a wonderful asset to the ever-growing talent at Johnson Consulting Group.
Linn-Hert-Geib Funeral Homes, Inc.
New Philadelphia and Dover, Ohio
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