It’s that time of year…
Article By: Jeff Harbeson, Funeral Finance, LLC
It’s the time of year that summer is coming to a close…summer is usually the happy warm and carefree time of the year. But in the funeral industry, we generally experience a downturn in activity. The death rate ebb and flow historically is slower during the summer which means that funeral homes and suppliers receive less revenue than other seasons (quarters) of the year. So, if your funeral home has followed the historical trends of decreased activity over the summer, as an owner, what measures are you taking to access your current financial posture? Did you experience a good 1st and 2nd quarter financially? If so, hopefully you “squirreled away” the healthy overage anticipating the 3rd quarter slump. If you had a mediocre or poor early half of the year, then what did you do for countering the typical summer decrease in volume? Raise prices? Launch a marketing campaign? Or, perhaps like many nothing…because “we have experienced this before”.
The death rate certainly is one of the factors of sustainability of everyone in the funeral industry. However, the market is increasingly changing. Every week I’m meeting with funeral home owners and I hear a recurring theme; “We are continually seeing an increase in cremations and the burial families are not what they used to be”. Basically, the firm is holding on their call volume, but the profit margins are decreasing. This conversation also is coupled with the funeral consumer shopping more, wanting more for less, and fighting off lower cost competition by discounting or basically accepting whatever the family is willing to pay.
Another factor that this time of the year brings is price increases from suppliers. Interesting that contracts are signed for a “great discount and rebate” program over let’s say a 3 year period. But if the company had an annual average 5% price increase over that time…then your firm is receiving 15% less across the board. How about your firms operating overheads? If you have not made GPL price adjustments on a regular basis (I saw a GPL a few weeks ago with a January, 2009 effective date), then the financial stress is mounting. So, with flat volume, increased overheads, cost of goods rising, competition for the same consumer…what are you doing to stay financially stable? What benchmarks are in place for employee revenue generation/performance, marketing for new business, operating on a more lean and profitable platform, how are you measuring the progress?
Just another conversation that we need to be having with each other in the funeral industry…
