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Should You Join The Family Firm?

Should You Join The Family Firm?

When John decided to pursue his career by coming to work at the family funeral home he thought (as did everyone else) that someday he would succeed his parents and own the firm. John is now 46 and his parents are in their late 60’s. In retrospect, John realizes that things haven’t been what he expected. He didn’t so much join the family firm as go to work for his parents.

At 46 John has never been allowed to make a major decision, never seen the company’s financial statements and is unsure whenever retirement comes for his parents whether he will have the chance to buy it (he has no significant cash resources) or if it will be sold to a third party.

This may sound bad to you, dear reader, but it is much more the norm than the exception. And it could all be avoided by asking some critical questions up front.

3 types of parents

I find 3 types of parents who own small businesses.

  • Those whose dream it is to pass the business on to their children
  • Those who welcome their children into the business but are ambivalent about it.
  • Those who would prefer their children seek other opportunities

From what I have learned about family businesses in general, each represents about 1/3 of current business owners.

But the real question is whether the current generation will ever be prepared to transition the business to their kids appropriately…and appropriately begins almost the day children join the business.

Trial period

It is often wise at a young age to “try on” the role. I do believe if children are considering funeral service as a career that they work for a couple of years at the family firm…just like everyone else. This means the same regimen, expectations, compensation and hours. NO SPECIAL TREATMENT. In this way, everyone has the chance before final commitments are made to see if it’s a good fit. Warning signs might be:

  • Inability to keep the same hours as other employees
  • Difficulty in interacting with families, guests and (especially) dead bodies
  • Lack of reliability
  • Inability to see oneself in this role for the rest of one’s life.
  • Inability to get along with your parents or siblings

There are good questions to ask yourself too:

  1. What is motivating me to join the firm?
    1. Dad or mom wants me to but I am not sure
    2. I can’t find anything else that interests me and I know I can get the job
    3. I can’t make as much money doing anything else
    4. I have watched my parents and I want to be like them
    5. I don’t really know
  2. Are family relationships healthy enough?
    1. Does our family have a track record of making good decisions together?
    2. Does my family value my input?
    3. How do we historically resolve disputes?
    4. What is my role compared to my siblings/cousins?
  3. Ask your parents early
    1. what is my career path?
    2. How will I be developed to take over running the firm?
    3. How will we know I am doing well?
    4. How do you envision my involvement in company governance?
    5. What, specifically, are your expectations for my performance?
    6. If we decide this is not a good fit, what then?
  4. is there a path to ownership?
    1. How do you imagine you will someday hand over ownership?
    2. is ownership available to siblings that don’t work in the business?
      1. If the answer to this is yes it should be a deal killer.
    3. How can I best contribute to the company’s prosperity?
    4. When it’s time for you to retire will I need to buy the company for full value or discounted value?
  5. Mom, Dad what is your vision for our future?
    1. what will we look like in 20 years?
    2. How will we get there?
    3. Will we still be relevant?
    4. Will my brothers and sisters be joining us?
      1. How will we determine who should be in charge?
      2. Will we have equal ownership?
        1. If so, how will we break the inevitable tie?

As I write this it occurs to me that most owners I know aren’t prepared for this type of conversation. But, maybe that’s a good thing. Because if you engage in this conversation (parents and children and key employees) it will cause you to crystallize some of the things you need to start working on to get you to that inevitable day.

100% of us will die and 100% will someday stop working. In my practice I see good stories; but, more often, I see sad stories. The good ones almost always are about people who thought things through ahead of time. The sad ones often didn’t think about it at all.

Fair Warning:

Funeral directors are notoriously passive-aggressive. This is especially so when they don’t want to address difficult issues. Sometimes it is necessary to have a 3rd party moderate this process. If, however, you are getting nowhere in getting your parents to address these important issues or answers are ambivalent and vague you have no right to expect that will ever change. So, you have a career decision to make. Some of the most successful owners I know had to confront the issue head-on and were prepared to leave the family firm. In the end, everyone was glad they did.  It’s called peace of mind.

By |2018-09-26T08:38:21+00:00September 26th, 2018|Blog, General Topics, The Creedy Commentary|3 Comments

3 Comments

  1. Gerry Fictorie September 27, 2018 at 4:22 pm - Reply

    As I read your post it brings back a lot of memories and not good ones. funeral directing and owner ship is a 3rd career for me. Our story to ownership was frustrating. the previous owners had no retirement plan, in their 60’s and they were family. Just to keep the story brief and working there for a few years I was no closer to ownership and they were no closer to “official” retirement. I did quit and went to work at a very aggressive funeral home for two years. That was the best thing I did the experience I learned there is priceless, being able to talk to the owners about business the experienced directors were all very helpful. It made me a better Director and owner because what I learned there, I was able to apply it to the funeral home that I did buy, which was the family run FH.

  2. Gene Ogrodnik October 4, 2018 at 6:36 am - Reply

    Alan:
    I’ve been valuing funeral homes and assisting buyers and sellers since 1992 as a CBA and CVA. And as my role as President & CEO at Pittsburgh Institute of Mortuary Science I’ve also had the opportunity and privilege of serving thousands of students many of whom were family members and some of which had absolutely no interest in funeral service. Today, I only see perhaps 18-20% of the student body related to a family member; some of which are not owners, of course.

    Your writing above was both eloquent and absolutely to the point! I’d like to give a copy to those students seeking entry into the family business if you don’t mind.

    • Alan Creedy
      Alan Creedy October 4, 2018 at 9:20 am - Reply

      Gene, thank you. My goal in writing is to help all of funeral service. therefore, almost all of what I post is intended to be open source and usable by anyone. feel free to reproduce. If anything says not for use without permission it is intended only for a subset of readers and that happens very rarely.

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