New Study Sheds Light on Succession Planning and the Impact of COVID-19 on Funeral Profession
ORLANDO, FL. – Foundation Partners Group, a leading provider of innovative funeral and cemetery experiences and products, today unveiled results of the 2020 Funeral Business Planning Survey. The study, conducted by an outside research firm in partnership with the National Funeral Directors Association (NFDA), presents an independent look at the current state of succession planning and the impact of COVID-19 on funeral services.
“The fact that the average age of a funeral home owner in the United States is now 55, means a large number of the country’s more than 17,000 independent and family-owned funeral homes will be bought, sold or passed on to the next generation in the next 7 to 10 years,” said Kent Robertson, president and COO of Foundation Partners Group.
Chief among the study’s findings are that nearly three out of four respondents (73%) do not currently have an exit strategy or succession plan, in spite of the fact that more than one-third plan to retire within the next five years. In addition, COVID-19 has had a profound and, in many cases, lasting impact on funeral services. For more information on the survey findings, download the full survey E-book here.
The Power of Planning
Of respondents looking to retire in six-to-twelve months, half are still developing plans, one-third have a plan in place and nearly 10 percent have no plan at all.
“The power of long-range planning to positively impact the sale price of a funeral home, transition to new ownership and a family’s legacy in the community is undeniable,” said Foundation Partners Chief Financial Officer Thomas Kominsky. “That’s why it is surprising that so many funeral home owners, close to retirement, have not formulated a plan for the successful transition of their business to new owners. Funeral directors help families pre-plan memorial services all the time, yet when it comes to planning their own futures, this study indicates that many funeral business owners are unprepared.”
When asked how they plan to exit their businesses, the majority (54%) of funeral service professional surveyed said they plan to sell or transition the business to family members. More than 10 percent said they will use a broker to market their business, while eight percent plan to partner directly with a buyer with whom they already have a working relationship.
When addressing the importance of eight retirement/succession plan objectives, survey respondents overwhelmingly rated “Continued high-quality service to our community” as their most important goal. Eighty-nine percent of respondents said maintaining service was “very” or “highly important.” The second most highly rated objective (83%) was “secure a financially stable retirement,” while “preserving a family legacy of community service” and “grow and develop the business” tied for third, each cited by 69% of survey participants.
Impact of COVID-19 on Funeral Service Owners
- The impact of COVID-19 on succession plans has been greatest on those planning to retire in the short-term. Although the pandemic has resulted in unprecedented changes in daily operations, more than two-thirds of funeral service professionals surveyed said the COVID-19 pandemic has not affected their succession plan.
- More than 12 percent said the pandemic has impacted their plans, with nearly half (49%) stating that it “delayed plans to exit the business.”
- Another third (33%) said the pandemic has caused them to “reassess” their entire business plan, while 11 percent said it ”accelerated” their plans to exit the business.
- Funeral services and profitability are down, butmost funeral business owners surveyed are confident in their ability to weather COVID-19 restrictions.
- Nearly half of survey respondents (49%) said profitability was down since the pandemic began.
- More than one-third (37%) of respondents said the pandemic increased call volume.
- Nearly 60 percent have seen an increase in cremations.
- A significant number of funeral homes plan to continue changes made in response to COVID-19. Clearly, the pandemic is making a lasting impact on the funeral service industry. Nearly half (49%) of survey respondents said they have made changes in funeral service offerings and/or operations in response to COVID-19, which they plan to continue post-pandemic.
- Remote attendance at livestreamed services is now a consumer expectation; digital services are here to stay. The increasing demand for live-streamed services is the lasting change cited most frequently by survey respondents, followed by “virtual (online) arrangements,” and “technology upgrades.”
- COVID-19 promises to have a lasting impact on funeral service offerings and pricing. The impact of COVID-19 on funeral service pricing and profitability varied among survey respondents. One respondent from Michigan has lowered the cost of chapel services but raised the price on graveside ceremonies. Another in New Jersey has raised retail cremation charges while others have totally restructured pricing and payment options and repackaged their service offerings. Others either contracted or expanded their operations as a result of the pandemic.
- Other lasting COVID-19 changes cited by survey respondents include:
- Increased virtual, online arrangements, electronic signatures and authorizations.
- Video tribute options after obituaries on funeral home websites.
- More outdoor graveside services and “home funerals” on family properties.
- Drive-by visitations.
- Increased interest in green burial and “no service” options for burial and cremation.
“The COVID-19 pandemic has changed the way most funeral homes do business,” said Deana Gillespie, NFDA research manager. “With increased expenses such as purchasing additional PPE, acquiring webcasting licenses, increased cleaning frequency and still providing meaningful services to families, it has become a huge challenge for funeral homes to maintain steady revenue and profits. Many funeral homes are reporting their profits have declined by an average of 20 percent. Given reduced profit margins and the uncertainty of how long this pandemic will last, it’s not surprising that the COVID-19 pandemic is altering many funeral directors’ retirement and succession plans.”
Nearly 400 funeral business owners, located throughout the United States, participated in the online survey, conducted between August 12 and September 11of this year. The study realized an 11.4 percent response rate, which places the survey confidence level at 95 percent with a +/- five percent margin of error. Three out of four respondents described their businesses as “family-owned” and 40 percent are multi-generational. Nearly three-quarters indicated they and/or their family have owned or worked in their current business for more than 25 years. For more information on the survey findings, download the full survey E-book here.
About Foundation Partners Group
Foundation Partners Group is one of the industry’s most innovative providers of funeral services. The company owns and operates a network of more than 150 funeral homes, cremation centers and cemeteries serving 65,000 families annually across 20 states. Our organizational structure allows us to embrace and grow the legacies of the local funeral homes we acquire while leveraging economies of scale, a deep understanding of technology and our ShareLife® customer experience-centered approach to deliver truly innovative and compassionate care to the families we serve. Visit www.foundationpartners.com to learn more.