Business valuations are a crucial resource for understanding precisely how much your funeral home or cemetery business is worth. Armed with the right information and insights, you can more effectively understand your business’s positioning and plan for the rest of the year.
As we head into the second quarter of 2023, it’s essential to—if you haven’t already—obtain a valuation for your funeral business. If you’re not convinced, here are four reasons why you shouldn’t delay.
1. Understand Your Business Health
Most planning meetings begin by recapping prior goals and their outcomes. While there are a number of metrics that can indicate the health of your funeral business (profit and loss statements, balance sheets, employee turnover rates), a full-fledged valuation takes everything into account and distills it into a number.
This number provides a top-down overview of how your business is currently performing, and it serves as the benchmark for both the near and long term.
2. Identify Strengths and Weaknesses
While a business valuation can be represented as a simple number, a proper valuation also includes all of the constitutive elements that lead to this number. So while your valuation will provide a benchmark of your business’s performance, one that makes it easy to compare to industry competitors, it will also provide you with an in-depth analysis of your business’s strengths and weaknesses.
A professional valuation will not only look at financial reporting, but it will also analyze many other things such as a funeral home’s management, market share, and future earnings prospects. From these more granular observations, your leadership team can determine what’s working and what could work better.
3. Set Goals for the Year
Once you’ve thoroughly assessed the current positioning of your business, you can begin creating your strategic plan. Using your valuation as the jumping-off point, you’ll create a series of objectives that aim to increase the value of your business.
For example, if your business is struggling with high turnover rates, you might create a plan for employee recruitment and retention. Similarly, if your sales team is struggling to fill your backlog of preneed sales, you may want to review outsourcing that functionality or what programs are being used, such as Lunch and Learns.
Ultimately, all of these goals, when executed properly, will lead to a more favorable valuation. In fact, the subsequent valuation can help you evaluate the success of these initiatives.
4. Plan Your Exit Strategy
Even if you don’t plan on selling your funeral business in the near future, it’s essential to develop an exit strategy as early as you can. Unless you plan on living forever, you’ll eventually need to sell your funeral business — and a business valuation is a crucial resource during the selling process.
It could take more than a year to make the proper adjustments to get your valuation in an optimal place for sale. Because of this, it’s essential to know your current valuation and how far it may fall short from your goal valuation for a sale.
Planning your succession in the funeral business can be a tricky process that often requires lawyers, brokers, accountants, and other funeral business owners. If you’re looking to learn the ins and outs of exit planning, then you should consider enrolling in the JCG Academy for Leadership and Management.
Understand Your Business’s Worth with JCG
While a simple valuation can be performed in a matter of minutes using the revenue multiple method, this shorthand valuation neglects the more nuanced components of your business and its cashflow earning potential. When it comes time to sell your business and a professional valuation is required, the resulting number will be different. Because of this, you should seek the help of experts.
Johnson Consulting Group provides valuation services that analyze your company’s historical performance and future projections. As well as examining your company’s financial records and operational structure, JCG will also compare your business to the greater marketplace, allowing the valuation to provide you with an accurate assessment of your funeral business’s value range. In the event that the valuation comes back less than you’d anticipated, the JCG team can also provide you with consulting services that improve your business’s value.
For funeral businesses of any size and at any stage in their life cycle, Johnson Consulting Group can help you prepare for the future, both in 2023 and beyond.
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