Valuing a Funeral Home
The need for funeral homes will always be there. Yet, there are many factors that contribute to the success or decline of a funeral home business. Because of the Covid-19 pandemic, revenues significantly increased. Funeral homes felt overwhelmed and overloaded with the rise in deaths following the pandemic. While revenue increased over the past year and a half, it isn’t projected to stay that way. As such now may be a great time to buy or sell a funeral home. Whether you plan on buying or selling a funeral home, take the time to learn what a valuation expert considers when valuing a funeral home. Several factors affect the value of a funeral home.
As a business appraiser, Peak Business Valuation works with many individuals who are buying or selling funeral homes. Before doing anything else, get a business valuation on the business. Part of a valuation consultation is discussing some of the key factors we use in valuing. Please remember, the factors below are only a guide. If you would like specific information, please reach out to our professionals. We would love to take a look at the value of your funeral home business. Schedule a free consultation.
Market Multiples For a Funeral Home
- SDE Multiple Average Range: 1.99x – 3.22x
- EBITDA Multiple Average Range: 2.77x – 4.08x
- REV Multiple Average Range: 0.57x – 0.99x
** Disclaimer: These multiples are for educational purposes only. Multiples are based on companies with revenues between $1-$5 million. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How a Valuation Expert Values a Funeral Home
A valuation expert often uses SDE multiples and EBITDA multiples when valuing a funeral home. A revenue multiple is not used as often as it does not consider the operations of the business. A valuation expert will determine what market multiples are applicable to your funeral home. For more information see Valuation Multiples for a Funeral Home.
To grow the value of your business, you need certain tools. An increased understanding of your funeral home’s worth is one way to do that. This is useful whether you are growing your business, buying a new funeral home, or want to maximize the value of your current business before selling it. The following key success factors can help increase the value of a funeral home. If you would like specific information on valuing a funeral home or a business valuation, contact us below.
Key Success Factors
Peak Business Valuation, business appraiser, values funeral homes across the United States. Below are some of the success factors that can help your business stand out. They can also grow the value of your funeral home. See also Value Drivers for a Funeral Home, How to Value a Funeral Home, and Valuation Multiples for a Funeral Home.
E-commerce Profits
Even funeral homes need to be online. Online shopping has completely taken over the world. As such, every business benefits from having some sort of online option. Since 2016, there has been a 15.5% annual growth increase in online sales for funeral homes. The convenience and stress-free environment of online shopping create a simple shopping experience for the grieving customer. Spending money to create a user-friendly website will increase your annual revenues. For more information see The Value of SEO For Your Business.
Customized Customer Experience
Losing a loved one is a hard experience for people. The funeral is a way to create closure. The funeral environment is very important to the customer. Paying specific attention to detail and caring for the customer will give you a better chance of increased revenue and referrals. The most valuable funeral homes offer several different packages with a variety of options. Be up to date on current customer wants and needs.
Number of Cremations
A valuation expert will look at the number of cremations verse traditional burials. Cremations have been on the rise in the past few years, increasing by 4.8% per year. There are several reasons people might choose cremation over a traditional burial. Such reasons could be reduced religious involvement, environmental concerns, and most commonly, cost. Cremations are a fraction of the cost of a normal burial. While cremations bring in less revenue than burial services, they can still be a valuable revenue stream. However, promoting traditional burial services for your customers is a great way to increase revenue.
Per Capita Disposable Income
Last, location, location, location. This is very important to the success of your business. A funeral home that is in a higher-income area is going to bring in more revenue. Consumers are more likely to buy full packages from your funeral home if their income is higher per capita. The better the economy, the better your industry will do. The income per capita is expected to rise in 2022. Using this to your advantage will increase the value of your funeral home.
Summary
There are several things a valuation expert considers when valuing a funeral home. Understanding the value of a funeral home is important whether you want to buy, sell, or grow a business. Getting a business valuation will help you understand the fair market value of the funeral home. It can also identify opportunities to increase the value of a funeral home.
Peak Business Valuation, business appraiser, values funeral homes across the country. If you have any questions about valuing a funeral home, please reach out to a valuation professional at Peak. Get started by scheduling a free consultation below.
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