For many small business owners, the decision of what to do with your business once you retire can be a challenging one. With so many factors to consider, how do you know whether it’s more profitable to sell your business to a new owner or simply close it? In episode #80, Elizabeth Larkin and Gene Marks discuss several strategies for determining whether your business has a viable future and how to ensure its success after you retire.
1:29—Today’s Topic: should I close or sell my business?
2:31—Take an inventory of all assets, including your workforce and property, to determine if your business has the potential to sustain itself in the years to come.
3:28—Once you are sure that you want to sell your business, reach out to other industry-related associations or business brokers that can help you find a potential buyer.
5:29—Be prepared to work with the new owner and provide them with all the necessary training they require to run your business.
15:20—Gene cites Sweden’s cashless policy to illustrate the importance of adapting your payment policies to fit your clientele.
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Elizabeth: Welcome back to another episode of Small Biz Ahead. Gene, this episode we’re going to be talking to a funeral home director.
Gene: Interesting. Do you know that the funeral home industry is one of the most fastest growing industry for female entrepreneurs?
Gene: Yeah, I read about that a few months ago.
Elizabeth: I wonder why.
Gene: When you think about it, more women are being driven to the funeral home business. First of all, it’s certainly a great business, and it’s right-
Elizabeth: It’s not going anywhere.
Gene: It’s not going to go anywhere. It’s only going to grow. But it is a business that really speaks towards the talents of nurturing, if I can say. It’s females have been found to have just a better ability, I’m generalizing here, but of connecting and making people feel more … You’re adding comfort. Particularly in a team of grief. And so there have been female business owners who are opening up funeral homes because it is a chance where you can provide that kind of a service, and it’s become more popular among females. So, interesting.
Elizabeth: Oh, interesting.
Elizabeth: Alright, well today’s question is from Albert, so it’s a man, in Tennessee, and he’s a funeral home director. And he writes:
“I’m getting ready to retire in the next five years. I’ve known for some time that my children don’t want to take over my business, so I don’t have anyone to pass it on to.”
Gene: They’re crazy.
“Should I close up shop or try to sell it? I own the building.”
Okay. So first of all, I love that this guy is thinking five years ahead.
Elizabeth: Like, how many people do that?
Gene: Yeah. I mean, it’s funny I always say that whenever I meet clients or they want to sell their business you say, “Well, you could sell it today, but if you want to give yourself five years to sell it, you will sell it for a lot more money if you do the right things.” So he’s planning an exit now, and he’s looking ahead and that’s exactly the way he wants to be doing it.
Elizabeth: And he owns the building.
Gene: So that’s great. And so should be operating the business. We should all be operating our businesses every day as if we’re going to sell it for the maximum price tomorrow. But that’s always not reality. So he’s got some time to prepare himself. Owning the building of course is great. That’s his asset.
Elizabeth: Yeah, because he actually has an asset other than just the name.
Gene: He’s got his name. He’s got his location. Without looking at his books, I’m curious if it’s profitable or not. Hopefully it is. If you’re a funeral home and he has employees … Again, I don’t know all this information about him, but you have to get certifications and go through-
Elizabeth: Yeah, I’m assuming there’s a lot of training involved in running a funeral home.
Gene: There is. So I’m assuming it’s not just him that’s in it. He’s got employees that he’s spent and put through this train. It’s a good asset for anybody who wants to get … Any female, by the way, who wants to get into the funeral home business. And we were just talking about two minutes ago, it’s not a bad … It’s not like again, the guy’s running like a blacksmith shop. This is a business that is viable.
So, I would not be closing down that business at all. That seems to be the kind of business that’s very, very sellable. I would be going to National Funeral Home Directors Association. I’d be going to any other industry related associations and putting the word out that you might be interested in selling in a few years, or if there’s anybody of interest, because if you wan to sell five years from now, there’s no … To me, I don’t think there’s anything putting you back from putting that word out, and working with a potential buyer over a couple of years to build the value while you’re still getting paid to do it, and then transition it off to somebody.
If you don’t wanna go into your local industry association, there’s brokers. Business brokers. So BizBuySell. You can put that in the show notes, it’s B-I-Z-B-U-Y-S-E-L-L, is a great website for anybody that’s looking to buy or sell a business. And with not … Just not only a lot of contents and information that’s available, but also they’re associated with the American Business Brokers Associations that can provide brokers that will sell. And they get a commission, obviously, but that’s another option. So I would not be shutting down the business unless he really thinks that there’s no future in it.
Elizabeth: So you would sell the business with the building?
Gene: Yeah. I mean, first of all, that depends on the transaction. Depends what he could get for either/or. So if you’re proposing to just break the building out as a separate thing, sell that to somebody else, that’s certainly an option too, if somebody else wants to do something with the property. But he’s got … again, I don’t know if he has any mortgage on this business either, because that’s going to play into his decision. But he’s got lots of options. So I guess his question is, should he just wind it down or not?
I would sell if it’s, yeah, if it’s an ongoing, viable business. This is definitely one industry that I would definitely do that.
Elizabeth: Is this the type of thing where he’d have to say, “Why don’t I sell it now and work for the new owner?”
Gene: See, a lot of times, yes. When you sell businesses, it’s nine times out of 10, when I see clients selling their businesses, everybody thinks their business is worth more than it really is. That’s human nature.
Elizabeth: Yeah. Of course.
Gene: And then so many people think they’re going to just sell a business and wipe their hands, collect their check and go down to the Caribbean, you know what I mean?
Gene: And that never happens either. It’s always worth less than you think it is, because a lot of times people just sell it prematurely. Don’t have a chance to build up some of the things that would increase value. And then most of the time, when people sell it, they’re asked to stay on board and continue on because there’s relationships that are there. Having said that, that’s one thing if it’s a service business. Like, if I were to sell my lousy business, whoever would be mentally ill enough to buy my business would, I’m sure, want to keep me around for a couple of years because I have relationships with all my clients and all of that.
I have to tell you, depending on his brand, I don’t know many people that really have ongoing relationships with their funeral director. I mean, I’ve heard of your accountant, your lawyer, and even your grocer. But the funeral director seems like the last person in the world you actually …
Elizabeth: Your grocer …
Gene: Yeah. We do. We go into our local, we have a local market. We know the people that are there and all that. Stop. But funeral director …
Elizabeth: You’re so old school.
Gene: Yeah, it is old school. But it’s not a … I don’t know if that’s really something that you say like, “Oh, I’ve got a really good relationship with my funeral director. He’s advising on death all the time.” So I don’t if it’s a business-
Elizabeth: Well, if you have a family you never know.
Gene: But the question is, is it a business that you just pull yourself out of and … without having to work it.
Elizabeth: I think if you’re doing … There’s not a lot of sales in a funeral home, I’m assuming. You’re not working on keeping clients or …
Gene: Right, like repeat business.
Elizabeth: Yeah. A lot of it’s word of mouth, because I know-
Gene: You’re selling into the Soprano family.
Gene: Like, “Boy, these guys, they keep getting more and more business.”
Elizabeth: It’s really all about customer service.
Gene: It is. It is.
Elizabeth: It’s all word of mouth. I mean, you’re not doing ads, you’re not …
Gene: Yeah. I mean, some funeral homes do advertise. The other source, by the way that I mentioned before, is if you’re reselling, which most do, they resell the caskets and all the accessories, there are large companies that makes this stuff.
Elizabeth: Wait, what? What? What? Reselling caskets?
Gene: Well, when I say reselling, you’re selling caskets, coffins and all that.
Elizabeth: Oh, okay. Okay. Yeah.
Gene: I mean, that’s part of the funeral home … what they do.
Elizabeth: I thought you meant used.
Gene: Oh, no, no, no, no, no. I didn’t mean that, I meant just selling it. And these are made by large manufacturers, and they also might have contacts in the industry. There are national brands of funeral homes that buy up as young individual ones, and then they’ve got their own models that they put themselves into.
Elizabeth: Well, I’m assuming if you are a small business owner who owns a funeral home, you’re spending most of your time managing your staff and training your staff. You’re not out there selling your services to people.
Gene: That’s exactly right.
Elizabeth: So if someone were to buy your business and say, “We want you to stay on for a year,” you would mostly be training people and making sure they’re certified in what they need to be certified on.
Gene: Assuming that the person that’s buying your business does not have much experience in the funeral business, they’ll definitely want you to stay along. But if you sell it out to a large chain …
Elizabeth: Or a competitor.
Gene: Or a competitor, or somebody that’s already in the business, they probably have their way of doing things and you might be able to get a quicker exit than elsewhere. Could you ever do that? Would you ever be in the funeral home business? Freaks me out.
Elizabeth: Maybe. I mean, the thing is, I feel like they are in the business of making people feel better.
Gene: They are.
Elizabeth: And that’s very …
Elizabeth: I don’t know. That’s kind of appealing. At the end of the day, you made something a little bit better for someone during a terrible time. I think that you could feel good about that business.
Gene: There’s a funeral home near us that the people live … it’s a house. It’s out of a house. And the people live in the house.
Elizabeth: Oh, wow.
Gene: And then they operate their business out of it.
Elizabeth: I wouldn’t do that.
Gene: You wouldn’t do that.
Elizabeth: You know what I would do if I were running a funeral home, I would have just all therapy pets there. Like, people would come in and I’d be like, “Do you want a bunny? Do you want a dog? Do you want a kitten? And do you want a pig?”
Gene: A great idea.
Elizabeth: And I would just …
Gene: It’s a great idea.
Elizabeth: You could just go sit in the room with your loved one who’s passed, and you have your therapy bunny with you.
Gene: That’s so sweet. You could partner with the ASPCA or a local animal rescue, and I think that’s really nice. Who knows if you even offer pet burial services as well? Whoa.
Gene: That’s a potential tip. There’s a lot that, obviously, that you can obviously do. I’d be a little freaked out living in the same house as a bunch of dead bodies.
Elizabeth: I would too.
Gene: Have you ever seen a dead body before? You must have.
Elizabeth: Oh yeah, at funerals, yeah.
Gene: Yeah, at funerals. Yeah.
Elizabeth: Yeah. But that’s after they’ve been embalmed and all of that, and dressed and whatnot. But I’ve never seen one like …
Gene: Like, not that … like right … yeah. I’ve seen four in my entire life. Is that weird? So it’s just a whole weird thing, and yet what’s really crazy about it is that everybody dies so it’s a huge industry, and nobody really kind of talks about it. But it just is what it is. I was a big fan of Six Feet Under, the HBO show.
Elizabeth: Yeah, that was a good show. Alright, well this podcast took a bit of a dark turn, so we’ll be right back in Gene’s Word of Brilliance.
Gene: We’ll try to brighten things up.
Elizabeth: Which we’re hoping is, yeah. A little cheerier.
Gene: More of a picker upper. But whatever. Stay in the funeral business. I’m sure if you work harder enough at it, you can kill it.
Elizabeth: We’ll be right back.
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WORD OF BRILLIANCE: Cashless
Elizabeth: So we’re back. We’re going to talk about Gene’s Word of Brilliance. But first, Gene, what do you recommend listening to right now?
Gene: Oh, I am glad you asked that question, Elizabeth. I have been listening 27/7, well, at least all my waking hours, the soundtrack to Hamilton. That’s what I recommend that you-
Gene: Yeah, obsessed with it. I have it on Spotify. I got one of the songs, the big song “My Shot,” which you know-
Elizabeth: I was obsessed with that two years ago, though. Where have you been?
Gene: You know what? Listen it takes me a little bit of time to get caught up, okay? I’m a little slow here. But it’s only two years out. It’s not like I’m telling you to listen to the soundtrack of Sound of Music or Hello Dolly. And I listen to one of the … I listen to one of the songs and it was great, and I was like, “Yeah, I’m going to listen to the whole you know whatever.” And I’ve been addicted to this and it is genius and it’s so great. And it’s not just rap, there’s a lot of traditional sort of Broadway music in it.
Elizabeth: Yeah, yeah, yeah.
Gene: Melodies are absolutely gorgeous.
Elizabeth: And yet he refuses to buy a ticket to see it on Broadway.
Gene: I’m not going to spend $700 for a ticket to see … I like it, but I like it … I’m not insane. And I’m dying to see it on stage. And I will see it when it travels the country, if it comes to Philly. Although I’m sure it’s going to be sold out in a big way on the national tour. But-
Elizabeth: You don’t have any connections? You can’t-
Gene: No. I have zero connections. And then it’s funny. People say, “Well, oh well. Lin-Manuel Miranda, all the original cast. They’re not going to be in whatever.” But there are so many talented people, these performers.
Elizabeth: Oh, yeah.
Gene: I have no worries about seeing an equally exceptional show in Kansas City and that’s just not because it’s in New York-
Elizabeth: Think about it though. There’s … So you think about people that are on Broadway, there’s so many movies and TV shows out there that are terrible.
Elizabeth: And there’s a ton of them. On Broadway, there’s, what, 20 shows running?
Gene: I know. I know.
Elizabeth: So everyone is good.
Gene: They’re amazing.
Elizabeth: Like everyone.
Gene: And you know what’s amazing are the Broadway … whenever you see a Broadway show is that for every one performer that you see on that show, there’s literally 50 that are almost as good as the performer. If not as good. That one performer got the job for whatever reasons.
Elizabeth: I just saw earlier this year-
Gene: There’s so many talented people.
Elizabeth: Book of Mormon in Hartford.
Gene: Oh, God. I’m dying to see it.
Elizabeth: It was great. It was so good.
Gene: That’s another soundtrack I listened to a few, like a year ago. Oh my God. It’s so funny.
Elizabeth: I love on the Hamilton soundtrack, I love the King George song. It’s hysterical.
Gene: How funny is he? And yet, at the end of one of the songs, he’s like, “Listen to me or I’ll kill you or your family.” It’s like, “Whoa. Where did that come from?”
Elizabeth: It’s so good. You know what I’ve been listening to, which is so geeky and don’t hold this against me, but I’ve watched all of Game of Thrones and I’ve read all the books.
Elizabeth: And I read a little bit … It airs on Sunday nights, it’s not one right now. But it airs on Sunday nights, and then on Monday afternoons when I’m eating lunch at my desk. When I have my sad desk lunch, I’ll read the recap on Vanity Fair or New York Magazine.
Elizabeth: Because you miss so much in that show.
Gene: You do.
Elizabeth: So I was reading a recap, and it mentioned a podcast about Game of Thrones-
Gene: And so you’ve been listening to that?
Elizabeth: It’s called A Cast of Kings. And it’s so good because it recaps the show, and then they talk about, the two co-hosts, talk about their feelings about the show.
Gene: That’s great.
Elizabeth: And I’m like, “Oh my God. I thought the same thing.” And I’m so … And it clears up so much because in a show like that, it’s so complicated.
Gene: It is.
Elizabeth: There’s so many different characters, and they’ll talk about something that happened in season one. I think we’re on season seven now.
Gene: Seven they just finished. Yeah.
Elizabeth: And plus there’s books, so I’ve read the books and sometimes it’s hard to remember, “Did that happen in the book, or on the show?”
Gene: But you realize season seven happened in no book.
Elizabeth: Yeah. Oh, I know.
Gene: They went off book.
Elizabeth: But they used some stuff that happened in the books that wasn’t on the previous seasons of the show that they’re now kind of having those things happen on the show. But it was a different character in the book. So anyway, if you watch Game of Thrones, I highly recommend this podcast because you can kind of … I don’t know. It’s just really good for working out, “Oh, yeah. That makes sense now.”
Gene: I love it.
Elizabeth: And things that you didn’t really understand. So it’s called A Cast of Kings.
Gene: I love it.
Elizabeth: And we’ll link to that in the show notes. So now let’s get to your Word of Brilliance.
Gene: So my Word of Brilliance today is cashless. And the reason why I brought that up is because-
Elizabeth: I’m usually cashless.
Gene: Yeah, cashless. I think we can all relate to that. But no, I’m not talking about cash and cashflow in your business. I’m actually talking about cash in Sweden. And the reason why I bring that up because I’d written about this elsewhere, Sweden’s retailers now in Sweden have reported, there’s a large report that just came out, 20% of the retailers, or 20% of the transactions going thought retail stores are now cash. 80% are non-cash. And that number has gone down by 100% over just the past few years.
Gene: In 2010, the Swedish government and the banking system decided that they were going to try to eliminate most of the cash in the country. Recent news is that in the UK, there are the 10 pound notes now where plastic currency to give it more life to it, but in Sweden … This is a country that is smaller. It’s only 10 million is the population. They’re more open to change. They have more trust in their banking system. Right? Bunch of ignorant people. But, okay. They have more trust in their banking system. And they’re also more technologically savvy in Sweden. And what they’ve done is most small business owners now, and small businesses are not taking cash. They have reduced the amount of currency in circulation. But again, by like 80% in just the past seven years. And the country itself is heading in that direction. And now I see over in the US, there are some stores like Sweet … You ever go to Sweetgreens?
Elizabeth: Yes. Yeah.
Gene: Sweetgreens. Yeah, it’s great. You can go there. You can pay $57 for a salad. Just fantastic. But it’s a salady-kind of place. They don’t accept cash in their stores. You have to use a credit card. Now I’ve always been, “You need to make sure that you are give your customers every available option that whatever they want to pay in, whatever cash they want, credit card, you’ve got to be ready to take that.”
Gene: Yes. So I don’t know if I’m ready to go completely cashless in that way, but this in one country right now that is really heading in that direction. And many small business owners there are realizing that they can succeed and do fine in a completely cashless society.
Elizabeth: No wonder. Is that better for the environment?
Gene: Well, yeah. Not only is it better for the environment, it’s also better for the safety. The less cash that your handling in your business, the less prone that you are either to employee theft, or somebody coming in and sticking a gun to your face. On the other side though, a lot of business owners, particularly I would imagine here. I mean, I have a few clients myself that would really resent not having cash because when you do stuff cash, you don’t necessarily have to put it all in your books.
Elizabeth: Oh, geez.
Gene: Right? So there’s that going on. And then the second thing that’s going on is there are fees. So people are like, “Well, fine if we go all cashless. But now every time I have a credit card transaction or a debit card, I’ve go to pay a fee. So it’s costing me more.” So is that an issue? All I’m saying is that in Sweden, you would think all of those issues might have been a big issues for the small business owners there. Apparently not. They are adapting it and embracing it.
Elizabeth: The Swedish are just cool.
Gene: They are cool.
Elizabeth: They’re also, I think-
Gene: And cold. A lot part … A lot of the year. It’s very cold up there.
Elizabeth: Yeah, very. And they do that thing, I think it’s called hygge. Have you heard of this or hygge?
Elizabeth: So they really embrace the cold. So they just are like, “Let’s put out a ton of candles, and have fires, and wrap ourselves in cozy blankets.” Like they just really … They think of the winter as a time to hibernate and just read and relax and everything. So they embrace it. But they’re also one of the happiest countries.
Gene: They are. I mean, I think they have national health in that country. They have very good public transportation system.
Elizabeth: Good education. They just have-
Gene: They have Volvo. Volvo’s excellent.
Elizabeth: Yeah. Volvo’s a good car.
Gene: The meatballs. Supposed to be delicious.
Elizabeth: RIP Saab. I had a Saab. I loved my Saab.
Gene: Saabs. Yeah that’s exactly right. We’re getting all Swedish here. But it’s really a cashless society in Sweden has been taken on the small business owners there have been embracing it. Whether or not that comes to the US, probably not to the same extent, but watch it.
Elizabeth: So what is the lesson for small business owners?
Gene: The lesson for small business owners, and I’ve repeated this again and again and again so I’m just going to say it again. For all of you guys out there that are only accepting cash, you are dinosaurs. You are going away. So I’m not saying you have to give up cash entirely, but I’m telling you right now, countries like Sweden and other parts of the world are going completely cashless. So you’ve got to wake up and accept that people … Millennial generation and people my generation, generation X, I don’t carry around cash with me anymore so I’m not going to be going to your restaurant or your store if you can’t accept my credit cards. It’s a huge thing.
Elizabeth: I know I’ve used this example before, but when I go to my hair salon, which I did last night, and they don’t accept tips in cash, it drives me crazy.
Gene: It’s nuts.
Elizabeth: Because then I have to run across the street to the ATM with wet hair and get cash out.
Gene: Drives me crazy.
Elizabeth: Drives me nuts.
Gene: Drives me crazy.
Elizabeth: Alright, that’s going to wrap it up for this episode. We’ll talk to you in a couple days. Thanks, Gene.
Gene: Thank you, Elizabeth.