Growing up I was exposed to many great television shows depicting life in a family business. Most are TV Classics that are unparalleled even today. From Sanford & Son to The Jefferson to my all-time favorite, Dallas, each show was unique with mixture of business and family dynamics. Some episodes were funny, some were sad, and others were downright unbelievable, but that is what made them great. The realism they portray of life in a family business is more accurate than many will admit.
Another show that depicts life in a family business, one which we can all understand well, was Fisher & Sons Funeral Home in the hit show Six Feet Under. The show opens with the father, Mr. Fisher, who was the local undertaker, being killed by a bus when it slams into his new hearse. The accident occurred because he was distracted by dropping his cigarette pack and ran a red light. Of course, by the standards of 2020, the death would probably be marked as “lung cancer due to or as a cause of smoking”, but I digress with my funeral humor.
Running a small business, especially a family business, regardless of the industry can be very rewarding. Of course, it can also be a very difficult task. Like every business, the owner is faced with financial concerns, customer issues, fulfilling orders timely, dealing with government regulations, employee issues, and the occasional legal battle, just to name a few. However, for the family business, you also have additional dynamics added to the equation. As an example, you might have partnership disputes, sibling rivalry, participating and non-participating family members, spousal conflicts, multi-generational differences, retirement needs, and the transition (or lack thereof) of leadership and/or ownership.
Family businesses are the backbone of our American economy and comprise the majority of our esteemed profession. Yet, family businesses can also place strain on family relationships, both at work and at home. Most funeral families that I know, including my own, live and breath funeral service. As such, not only did we work side-by-side together, but much of our downtime was also discussing work issues, whether at dinner, over the holidays, or on vacation. I believe it can also be compounded by the number of hours required in funeral service, which is not just between 9am – 5pm Monday through Friday, as well as the fact most funeral families realize that the customers’ needs take priority over their own families.
Do not get me wrong, as a second-generation funeral director, I can attest personally that our profession can be a very rewarding one, not just financially, but emotionally. The paycheck is important because we need the money to pay our bills and support our loved ones, but there is nothing more rewarding than the hug from a grieving widow, or the tears of gratitude from the young mother who lost her child and you have given her the opportunity to hold her baby one more time. We all have our stories of ways we have touched a family’s heart, and the ways in which they have touched ours. The memories you carry from those you have helped through life’s most difficult moments should make each of you feel proud. I know I cherish those aspects of my 35+ years at our family business.
The difficulty though is what to do with the business as you begin to age out. How do you transition the business to the next generation, or do you transition it to them? Here is another consideration, one most of us do not want to hear, does the next generation even want the business? Are they capable of running the business if they do want it? These are just a few of the many questions that need to be asked and answered for a successful transition within your family business unit.
As Dan Isard, our founder, shared in his spotlight this month, only 12% of all businesses continue within a family to the third generation. In fact, the traditional business that most of us grew up knowing is no longer the model that those of the Millennial generation and beyond desire. Much of today’s younger workforce is looking for a role with a company – or multiple companies as they search for the right role – that is larger than just a job. Many are looking for a way for them to feel they are making a difference in the world, not just in their backyard. This is a concept that many family-owned businesses struggle with today.
The recent 2020 Funeral Business Planning Survey conducted by the National Funeral Directors Association and Foundation Partners Group identified over 75% of funeral business owners are over 50 years of age, with 43% of those being over the age of 60. Why is this important? Because many of these owners will be leaving their companies soon, whether by retirement, disability, or death. In fact, as the study reported, the average age of owners today is 55, meaning a large percentage of family-owned funeral homes will transition ownership within the decade. The scary part of this survey reveals that 73% of respondents do not have an exit strategy or succession plan.
My dad died unexpectedly when I was 22, thrusting my siblings and I into leadership and ownership roles at young ages, we were all under 30. Throughout my career in funeral service, I have witnessed owners that have transitioned their businesses the same way my father did, and like my father, without a plan. My father was part of the GI generation and the business was left via his trust to his three children equally, a common but not always ideal transfer plan within family businesses. Most parents want to treat their children equally so they set up a will or trust and leave instructions to divide everything equally among all their children. But what if some children are in the business and others are not? What if some children have special needs requiring additional attention and care? What if none of the children are capable – or of legal age – to run the business? Have you created a plan that will build upon your legacy, or perhaps destroy your family’s relationship?
I have also witnessed family-owned funeral homes that were once the market dominator because the owners were charismatic leaders, but upon their death, the next generation leaders were not charismatic, and their businesses plummeted. Ultimately, each were sold to a third party, but much of the value was lost, negatively affecting the wealth of those next generations.
Another common issue I have seen negatively impact a family funeral business is the lack of a timely transition to the next generation. I have known several colleagues who were working in the business day-to-day and recognized changes that needed to be made, but their parents had no plans of turning over the company, and those parents were well into their eighties. Therefore, the businesses suffered because the owners did not want to spend the money to upgrade the facilities or adapt to the desires of today’s consumers thereby boosting their competitor’s businesses.
Developing a succession plan is one thing. Developing the right succession plan is one which takes much foresight and insight. It needs to be a plan that addresses more concerns than just the monetary value of the business. Closing the deal can be the easy part in a family business, whether selling to the next generation, an employee, or a third party. However, selling a family business in a way that allows for optimum success of both the business and the family unit post-closing takes guidance, skill, and the help of experts in creating such a plan.
If you are considering buying or selling a funeral home, give me a call. Our team at The Foresight Companies would be honored to help you develop a holistic transition plan. Of course, like so many things in life, the time to plan is now, not when it is needed.