Tag: succession planning

The Case of The Reluctant Successor

Written by Alan Creedy on June 15, 2023. Posted in The Creedy Commentary. 12 Comments on The Case of The Reluctant Successor

Case Studies in Succession Planning:

The Case of the Reluctant Successor

It comes as a surprise to most owners to learn that more than 50% of potential successors, whether they be children or key employees, either don’t want the business or can’t swing it financially. But many owners operate on the assumption that when it comes time to retire it will be an easy and stress free transition.

There are two elements at work in a sale or transition to insiders to be aware of:

Most owners fail to validate their assumption relative to interest or ability. They may discuss it in abstract terms but never get down to the how. Given the human penchant for deferring issues until they happen it is not unusual for this door to be closed in the 11th hour
Most owners fail to prepare their successor. I have had many experiences with 45 year old children who have never seen the company financial statements.

Jesse Milhouse is 65 and has decided it is time to “slow down.” His son, Jason (30), and his daughter, Jackie (28), have worked for him since graduating mortuary school. Both are funeral directors and embalmers.

When Jesse approached them about buying him out he was surprised to learn they weren’t “sure” they wanted to do that. Both were just starting families and didn’t feel they were ready or able to run the business without dad. No wonder, dad had done nothing to prepare them either practically or emotionally. Jason, in particular, wasn’t even sure he wanted to be in the funeral business.

Disappointed, Jesse took a step back. He and his wife, Ann, asked me to come visit with them.

I spent time interviewing Jesse and Ann and then Jason and Jackie. I learned that, while Ann and Jesse had always assumed that the kids would succeed them, they had never talked about it as a family. In recent years Jesse had become increasingly frustrated with the direction funeral service was taking. That frustration, in turn, had been expressed in the form of discouragement and anger. Jason and Jackie had internalized their dad’s behavior as indicating there wasn’t really a viable future. This gave them pause relative to whether they wanted to spend 30 to 40 years in a declining industry.

We concluded that the issue was twofold:

Was Jesse’s current perspective on the future valid or not?
Jason and Jackie needed to be developed into roles that could make them successful in 21st Century Funeral Service.

Since I believe that the future is a lot brighter than most believe, I recommended that they give it two more years and adopt a plan to see if they can have an impact on the business and for Jason and Jackie to determine if it will be a rewarding career.

Our first step was to train Jason and Jackie on the arrangement interview techniques that are part of our Service Charge Merchandising system. We also guided Jesse, Jason and Jackie as well as the admin team on assimilating the “Radical Hospitality” concept.

So far, they feel like they are making progress. They are picking up calls they wouldn’t have served before. Their average sale has increased by more than 10% without raising prices. Jason and Jackie are feeling much more confident about themselves and the future. Best of all, they recently reported they all love the feeling of wanting to go to work instead of having to go to work…including Jesse.

At this writing the jury is still out. But things are going in the right direction. A happy byproduct is that, if Jason and / or Jackie decide not to buy it, the firm will be significantly more attractive and valuable to a third party buyer.

Key takeaway:

Watch your attitude
- If it’s a bad deal for you why would it be a good deal for them?
Talk about it early, often and specifically
Prepare them for assuming ownership
Get your act together
- Don’t expect you successor to clean up your mess

How To Know When You are Ready To Exit Your Business

Written by Alan Creedy on July 17, 2019. Posted in The Creedy Commentary, Money: Getting it and Keeping it. 1 Comment on How To Know When You are Ready To Exit Your Business

How To Know When You are Ready To Exit Your Business

The answer to this challenge is both situational and personal.

Whether you plan on leaving the business altogether or you want to work as long as you are able, most people agree that achieving financial independence should be a primary goal. You may want to work until your 80 but you shouldn’t HAVE to work if you don’t want to or can’t.

I have created this matrix for my clients to be able to know where they stand.

Not able, Not Ready

Your business cannot be sold for full value and you are dependent on the value of the business to give you financial independence. If you have it, you need more time.

You need a plan to increase cash flow, create wealth independent of the business and create value for a potential buyer.

Ready, Not Able

The sale of your business will not result in financial independence. You are ready and the business is ready but you need time to develop alternative cash flows.

Able, Not Ready

The net proceeds of a sale combined with personal investments will enable you to be financially independent. However, you and/or the business are not ready to exit. If the business is not ready to optimize value then you need a plan that will get you there.

Ready and Able

Congratulations! This is the best of all possible worlds. You can choose your timing and know that you will be able to accomplish what you want. You need a plan to mitigate the risks of continued ownership.

Managing An Underperforming Family Member

Written by Alan Creedy on July 8, 2019. Posted in The Creedy Commentary, General Topics. 1 Comment on Managing An Underperforming Family Member

Managing An Underperforming Family Member

WOW! What a topic!

If you have ever attended a county fair, you may have witnessed a Mule Pull. This is a contest of mule teams pulling a weighted sled. Sometimes you will see an interesting and metaphorical phenomenon: A team of two mules will be pulling the sled. One mule is pulling with all its heart but the other may give an occasional tug but is really not contributing to the effort. If allowed to go on, the mule pulling with all its heart will be driven to its knees. To me, this has become the symbolic visual of families with an underperforming family member on the team. Eventually, those who are truly committed will be driven to their metaphorical knees.

When a family member underperforms on the job it has significant ripple effects for the business. At a minimum, it creates:

Frustration among other family members
Lowers morale among employees
Reduces respect for the company
Underserves customers
Increases cost by requiring “work – arounds” like additional staff and outsourced labor

But it isn’t an easy problem. In my experience, underperformance is often tolerated by the family because:

Everyone knows they couldn’t make it elsewhere
After all it’s your son, daughter, brother, sister, cousin
Funeral homes are notoriously passive-aggressive. Since they don’t think they can/should fire them they ignore the issue.

Underperformance in a family member is further complicated by the internal dynamics of the family. Frequently, there is an “Alpha” sibling/cousin who tends to dominate. Just as frequently, they have expectations of themselves they believe should be shared by all. As you might expect, it is often they who are defining underperformance? I have to say that in the majority of cases they have enough perspective to be right…just not as right as they think they are.

Personally, I am wired to be a workaholic. I actually like working hard, solving complex puzzles, stress. I need to feel I am making a substantive contribution. I have reached peace of sorts with my idiosyncrasy.

But what if my brother is not as driven as I am? Maybe he is willing to work hard; but, not AS hard. Maybe he contributes in different ways than I do. Or he has different priorities. Is it right for me to impose my work neurosis on him? Equally important, is it right for him to resent my driven behavior which may, in fact, be enabling the company to thrive?

So, the first question we have to ask is:

What constitutes underperformance?

Simply stated: “If you are paid a full wage, you should be expected to carry a full load. If you are in a management position in a small business, you also must accept the responsibilities that correspond to your level of leadership.” The latter implies you must do more than show up and accept orders…you must also think and anticipate.” In other words, you must contribute in some way proportionate to your income.

Hopefully, whoever is concerned about underperformance has thought through the level of expectation at which the underperformance would, at least, become performance. So, what do you do? At a minimum, Mr./Ms. Alpha leader, YOU should:

Create a safe place where you can all explore the issues
If one of you doesn’t want to or can’t assume management responsibilities, then adjust and find meaningful ways they can contribute
1. Do not lower expectations below those of other employees
Communicate clear expectations relative to job performance. For instance:
1. Be on time for work
2. When the company is busy, be ready to pitch in to help others
3. Act with respect towards all associates and customers
4. Take personal responsibility
5. Be willing to be held accountable
Be willing to provide regular feedback
If necessary, get counseling or mentoring for YOU and the underperformer
Be Humble
Think about getting a professional coach

What to do when they won’t step up to the plate:

When a family member will not step up to the plate it is time to answer these questions:
- If this person were not a family member what would you do?
- Are there some alternatives to being involved in the company that make sense?

Not long ago I was working with a firm struggling with this issue. One of 4 family members was simply not carrying their weight. In conversation, the others shared with me that he really didn’t want to be in the funeral business but couldn’t earn as much where his passion was. I observed that it seemed to me that his passion was High School Coaching. They were surprised at my insight and affirmed the observation. I shared with them that, as family members, they should have similar expectations relative to the contribution they make tothe family firm and that maybe they should consider encouraging him to pursue his passion and then subsidizing the difference in compensation. In this case, that made sense and the problem was solved. Family harmony was preserved.

ONE MORE THING:

Family drama always carries into the workplace. It is not uncommon that the underperformance issue is more a result of siblings not getting along or being frustrated with each other. Again, funeral homes are notoriously passive-aggressive. This is also a common trait of families where family harmony is important. I have experienced situations where family members are each fully capable, but simply shouldn’t be working together. There are several options I recommend they explore. These include:

Acquiring different locations and letting each person manage specific locations so they can stay apart
Sell the firm and let the parties get a fresh start without each other.
If they have multiple locations, divide the assets and go separate ways.
Retaining a professional coach that would help them mediate their issues.

Is there any hope?

Yes there is!

But, there is one universal, non-negotiable requirement:

ALL parties (mom, dad, son, daughter, uncle, aunt, cousins) must be EQUALLY committed to a solution. No EXCEPTIONS!

Why I Am Not A Funeral Home Broker

Written by Alan Creedy on June 25, 2018. Posted in Money: Getting it and Keeping it, The Creedy Commentary. 2 Comments on Why I Am Not A Funeral Home Broker

Why I Am Not A Funeral Home Broker

Jack B. Stalk has a special goose. His goose lays a single golden egg every year. That annual egg has enabled Jack to live in a nice home, drive a luxury car, take nice vacations, eat well, put his four kids through college and be a well-respected member of the community.

One day a goose broker approaches Jack and his wife, Edith, saying, “I think I could get someone to give you seven golden eggs for that goose.”

Jack and Edith had never seen that many eggs in one place before. They were excited and gave the broker permission to find a buyer. He did better than expected and got eight eggs. Of course, Jack and Edith could only keep six after they paid the broker fees and sent Uncle Sam his share. Nevertheless, they had more eggs than they had ever had at one time.

Unfortunately, Jack and Edith soon discovered that they couldn’t maintain their lifestyle without eating some of the eggs. Worse, consuming an egg meant they had to eat even more eggs. Six eggs wouldn’t last their lifetime.

Here is the difference:

Tom Lynch once said:

“A good funeral is one that gets the dead where they need to go and the living where they need to be.”

To paraphrase Tom:

“A good Succession Plan is one that focuses first on where you need to be and then, when it’s time to sell, on getting the best price with the most efficient tax structure.”

A broker’s job is to sell your goose for the most eggs in a one – time event. A noble goal but, in my opinion, freezing egg production doesn’t meet the real needs of most owners.

In a sense, as a Certified Exit Planner, I am more concerned with where clients need to be. This means considering the whole picture:

Your current and future financial needs
The value of your goose (now and in the future)
Replacing annual egg production rather than a one-time egg harvest

Download the WhitePaper: Why Selling Your Business Can’t Pay For Your Retirement. Click the Icon below.

New & Improved Funeral Home Valuator

Written by Alan Creedy on June 12, 2018. Posted in Money: Getting it and Keeping it, The Creedy Commentary. No Comments on New & Improved Funeral Home Valuator

I have chosen to celebrate the re launch of my new website with an updated and improved funeral home valuation calculator.

This calculator is part of my effort to help practitioners access quick and easy tools that will help them make better choices for their business.

You can use these calculators any time and as often as you would like. I especially like the idea of using them for “what if” modeling. But, hey, I am analyst by nature.

When you use this calculator I receive an anonymous copy. I am not sure why I get it because I can’t tell who it is from. Any way. I noticed with my old calculator that people weren’t entering their data correctly. So, I expanded it and included a brief tutorial to help with it’s use. Notice, I have included several test calculations to help you judge whether you are entering the data correctly.

as always: if you need help call me at 919.926.0688.

Funeral Service and Post Traumatic Stress

Written by Alan Creedy on January 4, 2017. Posted in The Creedy Commentary. 5 Comments on Funeral Service and Post Traumatic Stress

After the Newton Massacre I brought up the issue of Post Traumatic Stress Disorder in a blog entitled:

PTSD: The Slow Leak in Funeral Service’ Tire

I got so many responses I republished it as:

The Unspoken Affliction:PTSD and the Funeral Director

Since then I have received a number of comments and participated in several discussions on the topic. Today I received a post on the blog from a funeral director in the United Kingdom. It is so well spoken that in hopes it might help someone to know they are not alone I got permission to make it a blog of its own.

I would like to chime in here with my experiences, as your article has opened my eyes to what I have been going through in recent years.

I worked in two stints (one of four years and one of two) for a funeral director here in the UK. I have in the past described the ‘switching on and off’ of emotional awareness during removals to people in exactly the same way as your original poster and I too have had (for want of a better phrase) ‘flash backs’. The dream state situation described mirrors that of my own, also reported to me by my wife, whereby I was apparently regurgitating a traumatic scene my partner and I attended one evening a few years back.

Reading the original post has opened my eyes somewhat as I too felt that PTSD was something that could only affect first responders, military personnel and the like and my father, who was a firefighter for his entire working career never showed any signs of it, despite attending many extreme death incidents. I guess in a simple way this made me feel almost ‘disentitled’ to such a state.

What has genuinely surprised me the most though, is reading some of the subsequent posts regarding removal ‘variety’, trauma, and the poster being only 25; I was a mere 22 when I started, received no official training of any kind (I vaguely recall being shown for about 5 minuted how to walk in step when bearing a coffin!), no counselling or formal appraisal as to how I was coping, and attended a huge variety of incidents from the word go – on my first morning for example, shortly after breakfast I was shown an extensive post-mortem involving a lady who was cut from the mastoid process to the groin area. This threw me into a sort of ‘cold’ state where for several days I went into my shell. Despite wanting to quit, I pushed through and very quickly, almost (once again) like the flick of a switch, I became sort of numb to it. Only recently have I started to realise how unhealthy this may be.

I would also like to point out (again after reading one or two of the subsequent posts), that I wholeheartedly believe everything the original poster has said. Here in the UK, at least where I worked and across the entire patch, the funeral director does everything when it comes to removals. No coroner is present and the first doctor or medical personal have usually finished and left by the time we arrived. If someone was smashed beyond recognition by a truck, we put gloves on and picked up the bits. If someone was hanging, we cut them down with the only real help being (if we were lucky) prior experience from an older, more experienced duty partner.

On occasions, where the death was thought to be murder, we would attend alongside Scenes of Crime Officers, but we would usually still be the ones bagging and removing the body, usually under police escort.

The only warning we got prior to attending a harrowing scene was (if the control telephonist had knowledge of the gory nature) a quick “just to warn you it might be a messy one” type of prompt. One could almost say there was a macho element to coping wit things like this, as if we were all supposed to take it in our stride and feel nothing. Car crashes (RTIs / RTAs) and hangings seemed to me to be the most common incidents outside of the more ‘regular’ deaths, but I can of course speak only from experience.

I’d like to finish by saying that whilst there is obviously varied levels of training, support and regulation on offer, mine being minimal to say the least, a universal recognition of the very strong likelihood of PTSD being prevalent in the funeral trade needs to develop. I’d like to see this happen to protect the mental wellbeing of the people attending these scenes and dealing with the bereaved. I would also like to point out, that I have no grievance, issue or anger whatsoever toward the company I worked for.

Thanks for letting me share my story, it is the first time I have done so.

Once again I urge the national trade associations to embrace this issue as part of their agenda to support the practitioner.

Buy Sell: The Texas Shoot Out Provision

Written by Alan Creedy on November 8, 2016. Posted in The Creedy Commentary. 3 Comments on Buy Sell: The Texas Shoot Out Provision

I love the story of two little boys fighting over the last piece of cake. Mom comes into the kitchen as they are pushing and shoving and with “Solomon – like” wisdom says,

“Johnny, Billy, there is enough for both of you. Johnny I want you to cut the cake into two pieces and Billy you get to choose which piece you want”

So it is with business partners.

I am often asked to develop transition plans for businesses to be passed on to children. Occasionally parents insist on a 50/50 split. I don’t like these arrangements because they instantly create governance issues. My response is to always push the family to come up with a FORMAL plan on how they will “break the tie” in future disagreements and include that plan in the by – laws.

But my all – time favorite is the “Texas Shoot Out” Provision to be included in the buy – sell agreement.

It’s very simple:

Johnny can offer to buy Billy out at any time for a specific non negotiable price.

Billy has only two options:

He must either accept Johnny’s offer; or
Offer to buy Johnny out for exactly the same terms.

If Billy chooses #2 and reverses the offer Johnny MUST accept it.

Of course it could be Billy making the first offer to Johnny.

Either way, once one party makes an offer, the other MUST accept it or reverse it. Refusal to do either constitutes acceptance.

Kinda keeps things above board.

Boomer Owners: 6 Signs That It’s Time To Talk

Written by Alan Creedy on June 16, 2014. Posted in The Creedy Commentary, General Topics. No Comments on Boomer Owners: 6 Signs That It’s Time To Talk

The saying goes, “It’s lonely at the top.” Who do you talk to when you’re the boss?

Edgar Schein, Professor Emeritus at the Sloan School of Management at MIT, observed that the most common self – image among business leaders is that of the “Lone Warrior – Hero.” I have found this to be true among funeral home owners and managers. There is a sense of isolation and aloneness that pervades. At conventions and seminars a sort of bravado often emerges. People seem to be under pressure to look good or capable or secure when, actually, no one is any one of those things. I found this out, personally, when I began following up on some of the program presenters and discovered that their claims were… shall we say…somewhat embellished.

As I have grown older two of the things that I think are the most profound lessons are:

Our struggles, doubts, experiences and frustrations are never unique; and I have never met a whole person. By this second observation I mean that many of us think and behave like we should be perfect. Hence the preoccupation with persona. The bare – bones truth is that everyone has issues, disappointments, blind spots, failures and so on. The various coping mechanisms we employ may differ but it is more likely that you are no better and no worse than anyone else.

People have been saying of me lately that I am very intelligent. Make no mistake, I like hearing that. But it is not true. I know a lot about what I know about just as you know a lot about what you know about. It just so happens that I know a lot about things you don’t know about just as you know a lot about things I don’t. In other words the range of human intelligence is very narrow. In fact, I believe that, if we want to, we can know more about what each other knows. We can be smarter than we think we are.

All that said, one other lesson of my life is that age does change you. Many of us have less energy, less enthusiasm for adventure. Risk becomes a bigger word. More to the point for many, many business leaders as they get closer to the end of their career is the very profound struggle of succession. So, here are 6 warning signs that indicate (very strongly) that you should find someone you trust to talk with. All of us can tolerate an incredible amount of unhealthy thinking UNTIL we hear those same thoughts roll off our tongue. Talking openly with a trusted advisor or friend can literally catapult you into a much clearer and less frustrating world.

You find yourself fighting over things that don’t matter.
You find yourself just getting angrier as you get older.
You worry your identity is too tied up in your career.
You are not sure you can trust those who will succeed you.
You are unwilling to hand over what you created.
Thinking about change just makes you tired