Selling a funeral business is one of the most exciting times for an owner; however, it is a complex process that requires a great deal of thought and planning.
To ensure the success of the sale, there are a number of factors to consider. From setting realistic expectations to finding the right outside help, selling your funeral business is a difficult act to pull off, but if you do it right, you can guarantee that the sale sets you up for success – whether this means retirement or moving on to your next venture.
In this guide, we’ll review all the steps an owner must take from start to finish when selling a business.
Planning is Crucial
Before you start the sale process, it is important to plan ahead. Take the time to understand your business’s current financial health, market position, and future prospects.
Beyond this, you’ll also want to consider what your goals are with the sale. Are you hoping to exit a lifetime of work and retire in Florida, or are you hoping to sell the business and remain on the team in some capacity?
By planning out what your ultimate aim is, you can begin to figure out when you might sell, for how much, and to whom.
Set Realistic Goals
As you plan, it’s important to outline realistic goals. Naturally, every owner wants to sell their funeral home for the maximum price in the shortest amount of time, but this may not always be possible, depending on the state of your business and the greater market conditions.
Unlike real estate, in which homes may sell within a day of hitting the market, the death care industry is more specialized. Not just anyone can buy a funeral business, and among those individuals buying, not everyone is qualified.
By being realistic about the timeline of your sale, as well as your business’s asking price, you can prevent settling for less than you’re worth.
Valuation Package or Marketing Package?
Getting a valuation is the best way to internally understand where improvement opportunities exist for creating value.
A business valuation is an internal product and should not be shared with a potential buyer. Why? A business valuation will have a more conservative review with payroll, marketing, and other expenses that will be adjusted differently and more aggressively under a marketing package.
The sole purpose of a marketing package is to show the opportunity, minimize the risk, and create value in the business that may not exist today. For this reason, marketing packages are invaluable for business owners who are ready to sell NOW.
Time to Create a Marketing Package
As you begin the process of selling your business, you’ll need to get a professional marketing package created. Not only are marketing packages critical for any qualified buyer to review, but they also can give you an accurate picture of how much money you should ask for.
If the value from the marketing package doesn’t end up where you want it, then it may be best to hold off selling until you can make proper adjustments to your operations. At Johnson Consulting Group, we can help you create a post-valuation plan to improve your enterprise value.
Understand Tax Implications
When selling a funeral business, it’s essential to understand the entire picture of tax implications. Particularly for those who plan to retire after a sale, it’s imperative that you account for the potentially large taxes that follow a sale. Otherwise, you might have an unpleasant surprise come tax season.
In most cases, it’s best to seek some outside help. A consultant who specializes in the funeral industry can help your tax accountant and attorney best minimize your tax burden.
Finding the right buyer for your business can be a challenging process, one that will ultimately depend on the current state of the market as well as your ability to leverage your network. In most cases, an ideal buyer will be one already affiliated with the funeral services profession.
The funeral profession is a small network and many of the buyers are known. How you engage with those buyers depends on a well-constructed marketing package, confidentiality, and a timely process. This will ensure your success to maximize your value.
You may already have a buyer in mind, and that buyer would hope you would only talk to them. There are few buyers, if any, that would want to work with you indirectly through a broker. This is because they know they will have to pay more for the business. Ironically, all buyers would agree that a process that includes a broker is more organized, flows better, and is more timely to a close.
In summary, to maximize value, more than one buyer needs to be involved and it must be a structured process. Keep in mind that the highest price may not come from the buyer you thought would pay the most. At Johnson Consulting, we like to have 7-10 buyers involved in each marketing package. We are continually surprised by who the ultimate buyer is, as opposed to who we thought the buyer would be.
Work With Industry Experts
Selling a business is a complex process, the success of which will drastically impact your next steps in business and life. It’s essential to seek the outside expertise needed to execute a sale right. It’s surprising to see business owners who commonly use a real estate agent to sell their home, but not using an expert to sell the most valuable asset they own — which is their funeral business.
If the industry expert does their job, they will increase the value which will accomplish two things: put extra money in the owner’s pocket and pay for the consultant without infringing on the value the owner receives.
At Johnson Consulting Group, our team of death care professionals can help you through every step of the process, from obtaining a valuation, finding a buyer, and brokering an eventual sale. With our collective decades of experience in the field, our consultants, accountants, and brokers can help you plan an exit strategy from the ground up, aligning your goals with the potential of your business.
It all starts by partnering with us. By conducting a holistic examination of your funeral home, we can help you determine where your business currently stands and what needs to be done before a sale. Reach out today to schedule a consultation.