“Funerals just don’t happen by themselves.” – said every Funeral Director ever
No, funerals simply do not happen by themselves. They require expertise, planning, coordination, teamwork, management, and leadership in order to successfully serve a family and perform a funeral service—not to mention the consistency to do this over and over again at the highest level of performance.
So why is it then, that the same typically does not occur in succession planning for most funeral home owners? In a November 2020 Funeral Business Planning Survey published by an outside research firm in partnership with the National Funeral Directors Association (NFDA), nearly three out of four (73%) respondents do not currently have an exit strategy or succession plan, despite more than one-third planning on retiring within the next five-years.
Now, I won’t get into the reasons why this typically is the case—although I suspect it centers around the fact that most owner-operators are highly proficient at performing funeral services and less so at succession planning. It is the same or similar reason why most of us hire real estate agents when we need our houses sold—because unless we are in the real estate profession, we either do not have the proficiency or even if we do, we simply do not practice real estate transactions enough to be both effective and efficient. But I digress.
What I would like to focus on however, is that succession planning, proficiency aside, does require leadership and management skills from a funeral home owner. My very simple definition of leadership is one’s ability to motivate or influence others in order to achieve a common goal or purpose. Further, I distinguish between leadership and management in that I lead when working with people, while I manage when it relates to time, schedules, processes, and things. And you will need both skill sets because like funerals, succession planning just does not simply happen by itself.
Leadership during succession planning relates to every person you work with throughout the process—whether that be an agent or representative, accountants, attorneys, potential candidates, and even yourself. I cannot stress enough the importance of how you should actively motivate or influence any or all of these people to constructively work towards achieving your vision and outcome. This starts however, with having a clear vision of outcome of what you want as a result. Only then can you actively work to motivate and influence others to help you achieve this. For example, I have often experienced how attorneys can sometimes become roadblocks rather than being bridges needed for a smooth and timely transfer of ownership. Lawyers can become fixated on negotiating or arguing over a particular contract term, for instance. But this is where your leadership is required. If you and a buyer have already discussed, mutually and comfortably agreed upon principle terms, motivating or influencing an attorney to not hold up the process over an immaterial term or inconsequential clause to the principle agreement is not only your right, it is required leadership. Ensure that you lead others in helping you achieve your desired outcome.
Management of time, process, and all associated things to succession planning is also required of you. Regardless of whether you are working with representation or whether you are representing yourself, be prepared to spend time compiling and sharing information and data—financials, tax returns, employee census, fleet, property and real estate, deeds, licenses, inventory—the list is long, I’m afraid. You should also prepare to spend and manage your time and schedule for reviews of this information—whether it be with your representative, your own accountant, your own attorney and with the potential acquirer and their representatives and agents. The due diligence portion of the process in itself may be extensive. Then, there is state regulatory matters that can take a considerable amount of your time as well. And all of this, is on top of you and your staff continuing to serve your families and community. My point is that you need to prepare yourself in order to effectively manage your time, your schedule, and your part in the succession planning/exit strategy process.
Because succession planning and transfers of ownership don’t just happen overnight…at least not when it is purposeful and intentional to you achieving your vision and outcome. It requires expertise, planning, coordination, teamwork, management, and leadership—just like when performing funeral services.