Retirement is a significant milestone event for funeral home and cemetery owners. There’s a lot that goes into making the decision to retire; it affects multiple facets of one’s business and personal life and it is important not to rush through the process. In the latest episode of Jake Johnson’s (President and CEO of the Johnson Consulting Group) “M&A Minute” video series, Johnson discusses what to consider when retirement is on your mind.
The Crossroads of Retirement
The retirement decision presents varying options for funeral professionals—many often have to choose between selling the business or choosing a successor. “When you’re looking towards retirement, you may reach a crossroads where you are wondering should I sell my company or pass it on?” Johnson says. Whatever you decide, adequate preparation will be essential to help you make the right choice and get the results you want.
If you choose to sell, it’s best to start as early as possible because selling a funeral business can take several months (even years) from start to finish. Here are some of the initial steps you should focus on:
- Get financial documents in order—potential buyers/lenders often ask to see at least three years’ worth of financial statements and accounting records.
- Get a yearly business valuation—an in-depth valuation helps determine the true value of your business so you can set the right sales price.
- Make retirement part of your strategic plan—you must plan for the fact that one day you will no longer be involved in business.
Plan to be flexible if you are selling your funeral business. “Your buyer may not be waiting for you the day you hit the market, so your retirement [needs] should account for this,” Johnson says. In some cases you may need to implement operational updates/improvements before the sale can go through, thereby extending your retirement date further out.
You also need to be comfortable with the amount of money you have set aside for your retirement years. Will you have enough to live on? Do you have funds set aside for health insurance and other benefits that were previously paid for by the company? The answers to these questions will affect how you structure the deal to maximize your returns.
If you are ready to retire and thinking about succession planning or selling your funeral business, talk to the experts at Johnson Consulting Group (JCG). JCG is the largest broker in the funeral industry and we work hard to help our funeral home and cemetery clients create successful exit strategies. Please contact us for a business valuation quote today.
Jake Johnson and the Johnson Consulting team created the M&A Minute to help business owners through the process of buying or selling a business. The M&A Minute utilizes Jake and the JCG team’s knowledge to give advice that helps individuals feel confident and at ease when going through one of the most important times of their lives, selling or purchasing their most valuable asset. The M&A Minute is released every other Thursday. You can watch episode 9 now. Follow us on Facebook, LinkedIn, and Twitter to get M&A Minute updates.