Is It a Good Time to Sell My Funeral Home?
As a leading funeral home succession planner, we here at NewBridge Group often gets asked, “is now a good time to sell?” Of course, it is tempting to always say yes. The truth is, however, that only an owner can answer that question.
Selling a business – particularly one that has likely been in the family for multiple generations – is not just a financial decision. We regularly hear, “I’m selling Grandpa’s business.” As an owner, you know that there are memories and emotions intrinsically woven into the fabric of your work – the decision to sell is just as layered and complex.
While we cannot tell you if it is a good time to sell your business, we can ask the right questions that will help you find the answer:
Do you still enjoy going to work every day?
The past two years of a global pandemic have shown us how precious our lives are – you may have realized how little time or energy you have for the people and things you enjoy most in life. Many of our clients consider selling their business as starting the next chapter in their life.
Is your market protected from low-priced competitors?
We’ve seen the values of established funeral homes dramatically reduced by new competitors coming into a market with the intent to gain business solely upon having the lowest prices in town. These businesses aren’t shy about putting their prices on a billboard or in the local newspaper. In some cases, they will their prices next to your prices. A number of our clients understand that a larger organization can commit resources to countering a potential competitor.
Do you see families wanting to spend less on funerals?
Part of this question is, obviously, are your cremations increasing every year? More than likely, the answer is yes. According to the National Funeral Directors Association 2021 US cremation statistics, the projected cremation rate is rising, with almost 70% of Americans expected to choose cremation in 2030. Rising cremations erode the value of a business unless a funeral arranger can effectively communicate that cremation does not mean cheap; there is still significant importance in allowing for visitations and memorial services. While you may not be experiencing a dramatic increase in cremations like some other areas of the country, you may recognize families moving toward lower-priced services or merchandise. Lower revenue typically equates to lower business value.
Are your expenses increasing each year?
Health insurance and property taxes seem to increase each year, and vendors certainly aren’t lowering prices. Additionally, labor pressures appear to be the biggest impact within the last few years for business owners. If your revenues are not increasing each year, you need to do everything you can to reduce expenses so that your profitability doesn’t erode.
Is it difficult to find good employees?
Hiring and retaining staff is one of the biggest reasons owners are interested in exploring a sale – we hear comments like, “‘I just can’t find anyone with the same work ethic that my generation had,” and, “even my children don’t seem to want to work as hard as it takes to operate the business.” If there’s comfort in knowing you’re not alone, then you should feel extremely comfortable. This is the biggest concern to most funeral home owners. We’ve seen funeral homes that want to sell, but they don’t have any staff after the transition, and therefore the owners are unable to sell and retire.
Has your business been unusually busy the last several months?
Don’t be fooled by the elation you feel when you’ve had a few good months, convinced that all your problems are solved. You want to sell when things look good; you can use it to your advantage and realize that buyers will be excited to see a business with a few months of revenues that are above historical averages. Explore a sale when your business has been busy, not when things slow down again.
Once you can answer the questions above, you likely have a good idea if it is a good time to sell your business. The only question you have now is – what’s next?
THE NEXT STEP: NEWBRIDGE HAS THE ANSWERS
Here at NewBridge Group, we provide a step-by-step process to educate funeral home owners about the value of their business and the various opportunities that could be available to them in a sale. We believe that owners need to sell their business on their terms – we will take the time to know your objectives and develop a custom plan and structure that works for you.
All conversations are treated with the highest confidentiality; no one even knows that our clients are researching their possibilities. The complementary valuation work that we provide allows you to decide if you’d like to explore a sale or if you want to just postpone the idea for another few years.
NewBridge Group has been serving as succession planners to funeral homes for over twenty years.
As Seen In
Southern Funeral Director Magazine, May 2022