To effectively run your funeral home, it’s important to chart out your strategy in relation to a funeral business lifecycle. Naturally, this starts with the purchase (or creation of) a funeral home and ultimately concludes with an exit.
Failure to create an exit strategy in advance can lead to an unwieldy and financially risky transition. That’s why, as you plan for growth, you should simultaneously sketch out the basics of their departure.
Knowing It’s Time
There may never be a right time to exit your funeral business. In fact, throughout one’s trajectory, there will likely come several times during which an exit makes sense. The key here is to recognize when these moments occur.
Often, market conditions create optimal occasions for an exit. Perhaps, over the course of a decade, you’ve grown your business, you’ve received a high valuation, and the market is favorable. In these cases––even if you have yet to reach retirement age––an exit might make financial sense, particularly if you wish to cede leadership duties while still owning the business.
Alternatively, many find it’s time to exit for personal reasons. Perhaps you’ve felt burnt out in your role and this job no longer satisfies you in the way it once did. Or maybe you’ve reached an age where leading an entire team has become difficult, and retirement seems like the logical next step.
Whether your motives are financially or personally rooted––in most cases, both will come into play––you’ll want to recognize that an exit is on your horizon, allowing you to act accordingly.
Having an Exit Strategy
Ideally, you should have a rough idea of your exit strategy as soon as you begin operating your funeral home. It’s never too early to start planning your exit. This way, when ideal conditions arise, you can quickly put your plan into motion.
To prepare your exit strategy, you’ll want to consider the following:
Your career goals
Exiting your business does not necessarily mean selling it. As you plan your exit strategy, you should consider where you want your career to go. Are you hoping to exit the industry altogether, expand, or perhaps retire? Each of these options will drastically change your approach to an exit.
Your personal finances
Ideally, your funeral home has experienced consistent growth, allowing your exit (or sale) to provide you with optimal financial returns. Regardless, you’ll want to chart out your greater financial goals and examine how exiting your funeral home fits into these plans.
Whether you plan to pass your business down to a relative or sell it to another proprietor, you’ll want to develop a plan for succession. This will allow your funeral home to continue to thrive, even if you’re no longer a part of it.
While no two exits look exactly the same, we can break them down into two different categories:
In many cases, it makes more sense to maintain ownership of your business while handing off directorial responsibilities. This option allows you to continue profiting from the business you’ve created while scaling back responsibilities.
With this option, however, it’s essential to take the necessary steps to train your successor. Whether they’re a family member or external hire, a new owner will need extensive initial support to properly take the reins of leadership.
Selling your funeral home
The more final option, selling your funeral home, is often preferable for those seeking retirement or a total exit from the industry. This option, however, is heavily contingent on the market conditions. Selling your funeral home at the wrong time can result in significant losses while timing it properly can give you the capital gains to fund retirement.
Make the Right Choices
When contemplating an exit from your funeral business, the question is not one of if but rather when. At Johnson Consulting Group, our team of death care consultants has helped countless funeral homes navigate each step of their business lifecycle, from purchase and growth to sales and exits.
With a thorough understanding of the death care industry and our connections with qualified buyers, we can help you plan an exit strategy in alignment with your personal, professional, and financial goals.
In the funeral business, the exit phase is just as important as any other stage of growth. To ensure it goes smoothly, you’ll want to start drafting a plan. We’re here to help.PREPARE FOR THE FUTURE