Successful Succession Planning

When discussing succession planning, I always like to start by asking: How many of you are actively engaged in succession planning? If the answer is anything less than “everyone,” it’s a missed opportunity. Succession planning isn’t just for business owners; it’s critical for managers, employees, and everyone in between. It’s about fostering redundancy, nurturing talent, and preparing both individuals and organizations for a seamless future. Done effectively, succession planning allows you to focus on the most critical tasks as an owner, manager, or employee.

Starting with the End in Mind

A successful succession plan begins with a clear vision of the future. Ask yourself:

• What’s your path forward?
• As an owner, when do you envision retiring? Will you step back partially or fully? Will you remain involved in the business in any capacity?
• What’s the future health of your business? What does it look like one year, five years, or ten years from now?
  

Assessing Your Business as a Living Entity

Think of your business as a significant relationship. Is the future bright, or are there issues brewing? Here are some key questions to consider:

• Are you the sole keeper of your business’s critical knowledge and processes?
• Are family dynamics, such as involvement of children, creating complexities?
• Do key employees play a central role in your succession plan?
• Are you reinvesting in your business, or are you depleting its resources?
  

The answers to these questions can significantly shape your succession plan. Ultimately, your goal is to build equity in your business and ensure its longevity, even if you step away. To assess your progress, consider having a business valuation done along with a business assessment to assist in crafting annual strategic plans. These tools can help you determine whether your business can thrive without you.

Four Pillars of Business Success

When evaluating businesses, I focus on four key areas:

1. Customer Service
   • Measuring satisfaction through meaningful surveys.
   • Fostering a culture of customer experience (CX) by implementing training. programs. A recommended resource is The Customer Service Revolution by John DiJulius.
     
2. Workplace Culture
   • Utilizing effective onboarding and employee development tools to strengthen your organizational culture which will enhance productivity and employee satisfaction.
   • Holding regular meetings, including daily huddles, to boost morale and align goals.
     
   • Conducting employee satisfaction surveys.
3. Marketplace Position
   • Having an effective pre-need and aftercare follow-up program.
   • Hosting lunch-and-learns and other events.
   • Engaging with key influencers to amplify your business’s story.
4. Financial Health
   • Maintaining robust accounting and budgeting practices to ensure financial stability.
   • Ensuring the correct balance sheet metrics of cash, receivables, and debt load.

Maximizing Business Value

A well-planned succession strategy aligns with periods of high opportunity and low risk, translating to high value. Businesses with strong life expectancy typically attract the best offers during a transfer. Here are two critical metrics that highlight the importance of effective succession planning:

Case Count Trends
Consider three funeral homes, each with a 500-call volume:

• One sees an upward trend.
• Another is stable.
• The third is experiencing a decline.

Even with identical call volumes, their values differ significantly based on the trend direction. Positive trends generally enhance value, while declines diminish it.  The mere notion of trending indicates that you need to start now to impact the future positively as it takes time!

Average Sale
Rising cremation rates and low-cost competitors can impact average sale prices, affecting a business’s overall value. For example, a $100 decrease in average sale at a 500-call firm can equate to a value loss of $300,000 or more. Conversely, increasing average sales can yield substantial gains.
 
Analyzing performance within your team can reveal disparities in how individual employees contribute to or detract from the business value through their own individual average sale. Aligning compensation with these contributions is essential. (i.e. Incentive Compensation Plans).

The Challenge

In conclusion, ignorance may feel blissful, but it’s far from strategic. Knowing your business’s value today, yesterday, and tomorrow is crucial. By proactively creating a vision and tenaciously pursuing it, you can dictate your success. Succession planning isn’t just about transferring ownership; it’s about ensuring that your business thrives long after you’ve stepped away.

For additional guidance or questions, reach out to Johnson Consulting.

A funeral home is more than a business—it’s a legacy. But what happens when it’s time to pass the torch? This August 6-8, at CANA's 107th Annual Cremation Innovation Convention, Jake Johnson leads a motivating session. Exit with Success: Succession Planning and Your Business is designed to help funeral professionals take charge of their future, their value, and their exit strategy. 

Success isn’t just about luck; it’s about preparation and perseverance. By working hard, you can create your own “luck” and ensure a thriving future for your business. Join Jake Johnson at CANA’s 107th Annual Convention this August 6-8, 2025. Special rates are available for teams to learn, grow, and implement strategies together. Plus, the schedule is redesigned to ensure you can explore the Valley of the Sun in the cool mornings and evenings and fully savor the networking and learning in the air-conditioned Convention hall during the heat of the day. Visit cremationassociation.org/CANA25 to learn more and register today!

President & CEO at Johnson Consulting, Jake Johnson began his career at Keystone Group Holdings (now Dignity Memorial Network) as Associate Director, Corporate Development. This job included financial analysis, bank and equity partner presentations, along with accounting and system setup with acquired funeral homes. Jake then went on to work at Palm Mortuaries and Cemeteries in Las Vegas, NV, which at the time handled 6,500 funeral home families and over 2,200 cemetery cases out of 6 locations. Here Jake conducted funeral directing, funeral arranging, funeral home management, cemetery operations management, and sat on the executive board. Jake’s ability to problem solve business issues contributes to his success in currently owning a funeral home and cremation center in Sun City, AZ, along with a small-town funeral home in Batesville, IN.

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