Jake Johnson is President and CEO of Johnson Consulting Group, the funeral profession’s premiere funeral home and cemetery broker and consulting firm.
Jake is also a successful multi-funeral home owner, a tech entrepreneur, a car collector that would give Jay Leno a run for his money, and a published author, with his book, “Staying Alive in the Funeral & Cemetery Profession.” His experience has made him an expert in funeral home valuations, mergers and acquisitions, business development, and customer experience in death care.
03:39 💼 Johnson Consulting Group Performance Tracker
- The Performance Tracker provides valuable insights and accountability for funeral homes.
- It includes customer surveys to measure satisfaction and sales analysis to track performance.
- The tool helps funeral homes improve customer experiences and identify areas for improvement.
06:28 💎 Customer Satisfaction with Direct Cremation
- Surprisingly, customer satisfaction with direct cremation is low, contrary to popular belief.
- Funeral homes need to focus on improving the level of service and value provided for direct cremation customers.
- Direct cremation may be seen as a “good deal” by consumers, but there are often elements lacking in their experience.
07:39 🌟 Importance of Customer Surveys for Business Value
- Customer surveys provide valuable insights into the overall satisfaction of funeral home customers.
- Analyzing survey results can help identify areas for improvement and prevent the loss of potential customers.
- A high level of customer satisfaction contributes to the overall value and success of a funeral home business.
09:03 🌟 Understanding the Impact of Direct Cremation on Customer Satisfaction
- Direct cremation cases tend to have the lowest satisfaction among funeral home customers.
- The lack of services offered for direct cremation may be a contributing factor.
- Balancing the need for value in fewer touchpoints with direct cremation and meeting customer expectations is crucial.
- Technology, such as online tools and platforms like Parting Pro, play a significant role in enhancing the direct cremation experience.
11:22 💼 Rising Labor Costs and the Importance of Technology in the Funeral Industry
- Increasing labor costs, rising from 30% to 35-37% of net sales, pose challenges for funeral home profitability.
- Funeral homes that do not leverage technology may experience further pressure on their profit margins.
- Online tools and technology help funeral operators enhance efficiency, handle more cases, and save time.
13:12 💼 Importance of Feedback, Lead Generation, and Online Reviews
- Gathering customer feedback through surveys and online reviews is crucial for business growth and reputation management.
- Lead generation and online reviews are integral parts of funeral home software and can drive new business.
- Technology and data provide valuable insights, enabling funeral home owners to make informed decisions and focus their efforts on high-value activities.
14:20 💼 The Role of Specialization, Outsourcing, and Technology in Business Optimization
- Specialization, segmentation, and outsourcing have become essential strategies for optimizing business processes.
- Technology provides business owners with more information than ever, enabling them to make data-driven decisions.
- Business owners should focus on high-value activities and outsource specialized tasks to experts in their respective fields.
- Embracing technology and leveraging data can lead to greater efficiency and productivity.
- The younger generation has a natural affinity for technology, which will facilitate their ability to navigate and excel in highly digitized environments.
17:03 💼 Differentiating Through Customer Service and the Importance of Data
- Good customer service is crucial for funeral homes, but it can be challenging to determine the actual level of service provided.
- Funeral homes can differentiate themselves by leveraging data to gauge customer satisfaction accurately.
- Proactive funeral businesses seek out customer feedback through thoughtful surveys to understand how they truly rank and compare with their competitors.
18:53 💼 Maximizing Value through Data and Collaboration
- Funeral homes that embrace data and seek feedback from customers have the opportunity to continuously improve their services.
- Collaboration and sharing experiences among industry peers can also provide valuable insights for enhancing funeral home operations.
- Investing in data-driven decision-making and being willing to receive and act on feedback can help funeral homes achieve their goals and set higher visions for success.
22:22 💼 Creating a Collaborative Environment in the Funeral Industry
- Creating a collaborative atmosphere within the funeral industry can foster innovation and problem-solving.
- Funeral home operators should recognize the value of seeking outside help and collaborating with others who may have already solved similar problems.
- Failure should be viewed as an opportunity to learn and iterate quickly, freeing up more time to focus on successful initiatives.
24:54 💼 Understanding Valuation and Success Factors
- Valuation of a funeral home involves analyzing financial statements, case volume trends, and payroll restructuring.
- Benchmarking against industry standards helps determine the value of the business.
- Valuation is essential for understanding the current position of the business and identifying areas for improvement in order to increase value.
27:13 💼 Managing Time and Assessing Value
- Efficiently managing time and prioritizing tasks based on the expected value they will bring is crucial for success.
- Performing regular business valuations helps assess progress and determine if current strategies align with the desired goals.
- People sometimes spend too much time on activities that do not add value to the business and should reassess their approach.
28:21 💼 Factors Affecting Valuation Expectations
- Valuation expectations are generally high, influenced by increased activity and strong interest rates.
- Proper guidance and support throughout the selling process are crucial to achieving expected valuation results.
- Considering tax consequences and using a fair and conservative approach in valuations helps manage expectations and deliver accurate results.
30:27 💼 Elements Impacting Higher Multiples in Business Valuation
- Businesses demanding higher multiples in valuation typically have a well-functioning staff that can replace the owner effectively.
- The workload required for the buyer after the acquisition significantly influences the value of the business.
- High-performing funeral homes have a strong brand presence in the community, effectively handle cremation services, and have a solid online and physical presence.
32:41 💼 Maximizing Value through Strong Business Practices
- Businesses that demonstrate strong performance, compete well against competition, and have a solid presence online and offline tend to have higher value.
- Taking proactive steps to address industry trends like cremation and efficiently managing staff without the owner’s constant presence boosts value.
- A successful business should focus on strategic growth, delegate operational tasks to capable staff, and maintain a strong reputation in the community.
32:56 💼 Factors Affecting Valuation Expectations
- Businesses with lower average sale values may drive higher value.
- Some businesses are not value-driven and are vulnerable to competition.
- Strategic planning, budgeting, and online presence are crucial for the next generation of funeral home owners.
35:03 💼 Challenges in Assessing Impact in the Funeral Business
- The predictability of the funeral business makes it difficult to know if strategies are effective.
- Funeral businesses rely on families returning once or twice in their lifetime, making it challenging to assess impact.
- Strategic planning and proactive measures are necessary to stay ahead of industry changes and seize opportunities.
36:14 💼 Comparing Decision-making in Technology and Funeral Businesses
- Waiting a year to make business decisions is detrimental in the technology industry, where things move rapidly.
- Funeral businesses often take a longer time to adapt to changes, which can hinder progress.
- Funeral professionals should embrace opportunities and proactively address industry trends instead of waiting for them to happen.
37:26 💼 Impact of COVID-19 on the Funeral Business
- COVID-19 accelerated changes and created a paradigm shift in the death care industry.
- Workforce issues and rising costs have become pressing concerns for funeral homes.
- Funeral businesses need to adapt by raising prices or finding economical tools to manage challenges and maintain profitability.
39:16 💼 Cash Flow Coverage and Valuations
- Banks typically accept a cash flow coverage of 35 cents on the dollar for small businesses.
- Many funeral homes have fixed charge coverage well over two times, indicating strong cash flow.
- Managing to a budget and implementing strategic solutions can address stagnant growth and changing profitabilities in funeral businesses.
41:03 💼 Increasing Enterprise Value in the Funeral Business
- Case volume trends and focusing on each arrangement’s impact on business value are significant factors.
- Embracing technology and maintaining an online presence can contribute to increasing enterprise value.
- Having a good Five-Year Plan, collaborating internally, and strategically managing marketing spend are essential.
43:09 💼 Positive Trends and Adapting to Consumer Demand
- Funeral businesses should focus on year-over-year growth in case volume to capitalize on the increasing death rate in the United States.
- Differentiating oneself and catering to consumers’ desire for online services and information is crucial.
- Labor challenges can be addressed through technology and potentially raising prices to maintain profitability.
44:47 💼 Succession Planning in Funeral Home Businesses
- It is recommended to start succession planning early, with conversations happening regularly and strategic planning and budgeting involved.
- Internal family takeovers are less common, as the younger generation may opt to sell the business and explore other opportunities.
- High valuations can make buying a funeral business without a succession plan challenging, but options like employee ownership or gradual ownership transfer can be considered.
48:03 💼 Financing and Ownership Structures in Succession Planning
- Planning is crucial to navigate financing challenges, especially when business valuations and real estate values are high.
- Employee stock ownership plans (ESOP) or gradual ownership transfer can help dictate the business’s value and facilitate financing.
- Failure to plan early for succession may result in limited options for the next generation, either in selling the business or finding alternative solutions.
50:38 🛡️ Workforce Issues and Recommendations
- Funeral homes experiencing workforce issues, such as difficulty attracting talent and employee turnover, should assess pay rates and consider increasing them to attract the right people.
- Proactive funeral homes that offer competitive pay tend to have higher employee satisfaction and become workplaces of choice.
- Segmenting and specializing functions within a funeral home can help address labor challenges and reduce stress on employees.
52:57 🛡️ Balancing Pay and Job Satisfaction
- Funeral home owners should assess their pay rates and make a decision whether to increase them to attract qualified talent or consider selling the business.
- Offering a balance between job satisfaction, such as work-life balance, in addition to competitive pay may compensate for sacrificing higher wages.
- As government financial support diminishes, the labor market may experience deflation, which can impact workforce dynamics.
53:54 🛡️ Hiring Individuals from Non-Funeral Industry Backgrounds
- Hiring individuals who do not have formal education or training in funeral directing can be beneficial if they possess strong communication and customer service skills.
- The funeral industry needs to address educational requirements and licensing regulations, as dual licensing or college degrees on top of funeral education can limit the pool of potential hires.
- Competing with alternative career paths, like becoming influencers, poses a challenge for the funeral industry in attracting young talent.
55:31 🛡️ Exploring Alternative Models for Funeral Arrangements
- The concept of contracting funeral arrangements through roaming Funeral Directors or gig-based platforms like Gig Scout may offer flexibility and alleviate pressure on traditional funeral homes.
- The salon model, where hairdressers rent chairs, can serve as an analogy for the potential future of funeral service contracting.
- The funeral industry needs to overcome establishment barriers and embrace innovation to address labor and business challenges.
57:09 🛡️ Attracting Talent and Aligning with Customer Expectations
- Funeral homes need to understand the changing workforce dynamics and align their practices with the expectations of younger employees, such as allowing for work-life balance and offering competitive benefits.
- The perspective of funeral homeowners has evolved over generations, and it is essential to adapt to what the customer wants.
- Balancing customer expectations and maintaining profitability can be challenging, and funeral homes need to find the right balance to provide value to their customers while meeting their financial obligations.
59:29 🛡️ Explaining and Demonstrating Value
- Funeral homes need to excel in explaining and demonstrating value to potential customers, ensuring that their services resonate with them.
- Creating a compelling value statement is crucial to communicate the unique offerings of funeral homes.
- Using different communication channels, such as video content, personalized introductions, and online reviews, can enhance the value proposition of funeral homes.
01:02:19 🤖 Future Outlook of Death Care Industry
- The death care industry is expected to see an increase in volume due to the aging Baby Boomer population.
- More funeral homes will have an online presence and offer online funeral arrangements.
- Proactive funeral directors who outsource non-essential tasks and focus on growing their business will stand out.
- The industry will experience a shift from being order takers to critical thinkers and value creators.
01:05:06 🤖 Importance of Customer Perspective and Scaling
- Funeral homes should focus on meeting customer needs and expectations rather than getting caught up in trendy technologies or features.
- Scaling and expanding the business are essential for success, but funeral homes often lack a scalable approach.
- Conducting surveys, market studies, and seeking feedback from customers can help funeral homes understand what truly adds value for customers and avoid wasting resources on unnecessary innovations.