THE UNASKED QUESTION, THE UNWANTED ANSWERS

“How long will my burial business last?”

As I was writing this article, our eight-year-old grandson shed some light on the responses from – well an eight-year-old point of view. My wife, a former teacher, was helping him with his homework – a fair amount of math work and then onto the dreaded reading. Our grandson, who was about at his concentration limit for the moment, started playing a video game.
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When his grandmother mentioned reading a bit, his reply was surprising and unexpected. His delivery was neither harsh nor snippy. He merely said, “Maybe after this game or when I am dead.” In other words, my wife asked the question he did not want to hear and we got the answer that grandparents don’t want in return. Still, we found it quite funny, exactly framing his “not now” attitude. Discussions on changing consumer attitudes and funeral home finances today often elicit a similar response – not now.

if not now, when? 

Earlier this year, a funeral home owner asked me, “How long will my burial business last?” On the surface some might scoff at such a question – too simplistic, too old school. I beg to differ. Looking at this question offers us an insight into the core revenue of a funeral home. The issue also allows me to re-address a topic I first covered several years ago.

Ten years ago, a funeral home owner asking a question on “how long a burial business will last” would have delighted me! To hear it today is a bit disheartening yet shows that owners are finally thinking about the impact of cremation. After all the forewarnings from myself and others, funeral home owners finally now feel the revenue effects. Neither I nor others take delight in the ‘sudden realization’, but we fully understand the dilemma that you face.

what to do?

If you are a funeral home owner close to retirement, maybe the answer is to find a willing buyer. In our valuation work, we find that top-performing firms obtain the highest values. Top performers attract skilled staff and maintain their facilities meticulously. If your firm is not a top performer, you may want to change your management style.

Many funeral home owners are not ready to retire. Funeral service may still be calling - kudos to you. What is the best course of action for those closely held to funeral service? There are a number of points to consider.

REMODELING
To be clear, I am not referring to remodeling the facilities (although that could be an issue too). In this case remodeling refers to remodeling the core business - a new business model, a business model based on the financial realities of a different revenue stream, probably with less revenue per call than in the past.

STAFFING
Much has been written about the current high employment rate and the difficulty in finding employees. Funeral service has its own challenges, which I hear about weekly – “There are no quality, qualified licensed funeral directors to be found.” Outside analysts agree that we are experiencing a shortage of trained personnel in funeral service and will for a number of years.

Outside of raiding other funeral homes, attracting top-notch people to funeral service is one solution. Regulations need to change by accommodating quality personnel who may not want an embalmer’s license.

OWNERSHIP SHIFTS
A recent rush in acquisitions foretells the shift in funeral home ownership. Sixty-year-old-plus owners now face their own exit. Some are well prepared, but some are not. The consolidation of competitors began a few years ago and will continue for several years. This consolidation of owners, and perhaps rooftops, bodes well for the younger generation of owners. My 2015 estimate of 25% too many funeral homes in the U.S. needs to be updated, but I suspect that number has grown. Taking calls from declining firms or making prudent acquisitions ensures their success. However, successful owners must capture consumer needs today.

CONSUMERS’ NEEDS
Easier said than done, understanding consumers takes on critical importance. Without relying on casket and vault sales as the main revenue-driver, new-age owners will allow consumers to express their grief in new ways – ways driven more by consumers right now, than orchestrated solely by what was done in the past.

Owners refusing to embrace the new consumer-driven business model can count their days by how many caskets they sell. If you did not watch the August 14, 2019 HBO special, Alternate Endings, find a way to view the show. The story of six endings contained several emotional departures from funeral service, but the biggest takeaway? While there may have been licensed funeral directors in the back stories, no funeral director took a vital role in these non-”traditional” funerals.
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The 2019 NFDA Consumer Survey found that 53% of those surveyed indicated that they could do their own funeral or memorial service, without a funeral director. Thankfully many client-families still want or need a funeral director but the HBO special and the NFDA survey point to what could be a rising number of people who don’t see a need to use you. How can we attract more interest in ceremonies recognizing a life lived?

imagination gone wild

For nearly a century, funeral service hid behind the casket and vault sale. The loss of casket and outer burial container sales clearly reduces revenue. We must focus more on the personal side, making solid connections with consumers – no more just glad-handing family members as they come in the door – because, they may not come in the door. We must give them a reason that “remembering a loved one” is important.

The move from merchandise-oriented to a service-oriented funeral business began many years ago in higher cremation areas. Now, the cremation upturn is hitting even the rural and largely unaffected areas.

In a recent AARP magazine interview, musician Carlos Santana commented, “You stay relevant by trusting you have something people need.” Funeral business needs to specialize in service now or risk irrelevance.
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As the HBO special revealed, some consumers want a personal hand in a memorial (or living funeral). We have to help them truly capture the essence of their loved one. Making each funeral/memorial service special is the future of funeral service in my opinion.

SUCCESS IN THE 2020S

Themed good-byes represent one logical solution. Yes, they may take a lot more work than the old burial model, but they usually contain the “wow” factor for many consumers. Celebrants or celebrant-like ceremonies seem to make more connections as well. Look for off-menu choices that resonate with client-families. Let your imagination run wild and something magical may just happen. Success in the 2020s will be measured by story-telling, creating a compelling story about a loved one, a story even an eight-year-old can appreciate. Master-storytellers will excel.

Our eight-year-old grandson was finally persuaded to read that book he discarded. He actually found it thought-provoking. It was a small history book from nearly 100 years ago. Things have changed dramatically since then — many advancements but many old beliefs dispelled.
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Losing 1.65 burial calls per 100 cases annually to cremation or $66,000+ over the next 10 years is not welcome news. Our 500-call funeral home owner exhibited the courage to ask the tough question. I hope he is ready for the answers. Are you?

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This post is excerpted from the full article “How Long Will My Burial Business Last?” originally published In Volume 16, Issue 3 of Directions by Nixon Consulting, Inc. This newsletter content and information is sent to clients and associates of Nixon Consulting, Inc. Published quarterly. Subscription is by Invitation only from NCi. Reproduced with permission of the author.

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David Nixon began working with funeral home owners in 1979. David is a Certified Management Consultant™ (CMC®), accredited by the Institute of Management Consultants, USA. David is noted for his ‘Listening to Cremation’ annual cremation study, which was first published in 1995. In addition to his work on funeral home financial analysis, he also concentrates on strategic planning, FTC Funeral Rule Compliance, funeral home budgeting and pricing, as well as funeral business valuations. David also focuses on exit planning and the transition of funeral home owners with all the complexities involved in selling or buying a funeral home.