by Heath Frantzen
Delta Business Services.com
"I have a very highly developed sense of denial"- Gwyneth Paltrow
Nearly every study done on business succession readiness indicates that 70% or more of all small and medium business owners have no written exit plan in place.
Funeral business owners are no exception even though they know, perhaps better than anyone else, the high cost of failure to plan.
As a funeral director, you are confronted daily with painful and stressful conditions that occur when your clients don't make plans and are forced to make important decisions under duress. You probably also realize that most of this failure to plan can be traced to human beings' intimate relationship with denial.
Denial is a powerful, double-edged sword. On the one hand, it helps us cope with devastating occurrences that come our way. On the other hand, it often leads us to eschew preparation and planning in favor of crossing our fingers and hoping for the best.
Funeral directors succumb to denial just like anyone else; putting off much-needed business succession planning in lieu of a "wait and see" approach.
While most funeral business owners express an intense desire to see the businesses into which they have poured so much of themselves continue after they have retired, few have a plan in place to make that happen.
Without such pre-retirement planning, owners are opening themselves up to situations which can severely compromise their ability to sell their businesses for enough money to retire.
Many of them believe that when the time comes to walk away from the business, they will be able to sell the business quickly to a competitor for a nice price.
Why Selling to A Competitor Isn't Always A Good Idea
Over the past few years, large corporations have been buying up individually owned funeral homes in record numbers. Many directors have balked at this trend and are not interested in becoming a part of a "McBurial" chain.
It's natural, then, that when the time comes for those directors to retire; they look for other independent mortuary business owners to whom they can sell their profitable business.
However, before selling your business to a competitor, be sure you understand some of the potential adverse consequences of such a sale.
1. The would-be buyer's interest may not be genuine. In many businesses such as funeral homes, it is not uncommon for another business owner to feign interest in purchasing a competitor simply in order to gain inside information. By posing as a prospective buyer, competitors may hope to get access to your trade secrets, marketing techniques, or customer lists.
You must not give way any sensitive data until you have done due diligence and are satisfied that the prospect is genuine. One way to do this might be to ask for proof that they have the funds available to make such a purchase. ALWAYS ask potential buyers to sign a non-disclosure agreement that has been reviewed by your attorney. This can serve as a deterrent to "fakers" and protect your trade secrets during the selling process. You might also want to ask others you trust in your business about the reputation and integrity of the competitor who wants to purchase your business.
2. Competitors sometimes have a "low-ball" game plan. Selling to a competitor means that you are selling to someone who ostensibly has as good an insight into the funeral industry as do you. He or she has knowledge specific to the business that allows them to justify offering you less that the most desirable price.
For instance, competitors understand all the stresses and headaches unique to the funeral home owners; they understand the "buttons" that can cause an owner to want to sell. Because they can read you and your situation, they are not as likely to want to give you your price as an equity fund or individual buyer. Additionally, because they can perform the same services as you do, they often try and carve out the "good will" part of the business valuation.
Delta Business Services.com
"I have a very highly developed sense of denial"- Gwyneth Paltrow
Nearly every study done on business succession readiness indicates that 70% or more of all small and medium business owners have no written exit plan in place.
Funeral business owners are no exception even though they know, perhaps better than anyone else, the high cost of failure to plan.
As a funeral director, you are confronted daily with painful and stressful conditions that occur when your clients don't make plans and are forced to make important decisions under duress. You probably also realize that most of this failure to plan can be traced to human beings' intimate relationship with denial.
Denial is a powerful, double-edged sword. On the one hand, it helps us cope with devastating occurrences that come our way. On the other hand, it often leads us to eschew preparation and planning in favor of crossing our fingers and hoping for the best.
Funeral directors succumb to denial just like anyone else; putting off much-needed business succession planning in lieu of a "wait and see" approach.
While most funeral business owners express an intense desire to see the businesses into which they have poured so much of themselves continue after they have retired, few have a plan in place to make that happen.
Without such pre-retirement planning, owners are opening themselves up to situations which can severely compromise their ability to sell their businesses for enough money to retire.
Many of them believe that when the time comes to walk away from the business, they will be able to sell the business quickly to a competitor for a nice price.
Why Selling to A Competitor Isn't Always A Good Idea
Over the past few years, large corporations have been buying up individually owned funeral homes in record numbers. Many directors have balked at this trend and are not interested in becoming a part of a "McBurial" chain.
It's natural, then, that when the time comes for those directors to retire; they look for other independent mortuary business owners to whom they can sell their profitable business.
However, before selling your business to a competitor, be sure you understand some of the potential adverse consequences of such a sale.
1. The would-be buyer's interest may not be genuine. In many businesses such as funeral homes, it is not uncommon for another business owner to feign interest in purchasing a competitor simply in order to gain inside information. By posing as a prospective buyer, competitors may hope to get access to your trade secrets, marketing techniques, or customer lists.
You must not give way any sensitive data until you have done due diligence and are satisfied that the prospect is genuine. One way to do this might be to ask for proof that they have the funds available to make such a purchase. ALWAYS ask potential buyers to sign a non-disclosure agreement that has been reviewed by your attorney. This can serve as a deterrent to "fakers" and protect your trade secrets during the selling process. You might also want to ask others you trust in your business about the reputation and integrity of the competitor who wants to purchase your business.
2. Competitors sometimes have a "low-ball" game plan. Selling to a competitor means that you are selling to someone who ostensibly has as good an insight into the funeral industry as do you. He or she has knowledge specific to the business that allows them to justify offering you less that the most desirable price.
For instance, competitors understand all the stresses and headaches unique to the funeral home owners; they understand the "buttons" that can cause an owner to want to sell. Because they can read you and your situation, they are not as likely to want to give you your price as an equity fund or individual buyer. Additionally, because they can perform the same services as you do, they often try and carve out the "good will" part of the business valuation.
(SEE THE REST here: http://ezinearticles.com/?What-Funeral-Directors-Must-Know-Before-Selling-Their-Business-To-A-Competitor&id=8474089)
FILE Under: funeral-director-business, #selling-funeral-homes, selling-mortunary-business, how-sell-funeral-business, baby-boomer-business-owners, how-funeral-home-owners-can-sell-their-businesses-more-money-less-stress, funeral-home-business, selling-your-funeral-business
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