It’s that time of the year again….planning time.
It happens every year. Business slows down around Thanksgiving and we coast through the Christmas season. I like that predictable cycle because it gives me a chance to focus on my family and the spirit of the season.
As soon as we hit January all heck breaks loose as many funeral home owners suddenly decide that they were not satisfied with their 2010 numbers and it’s time to develop a new plan.
This year I received the first “I need some strategic help” email on New Years Day!
Even with the economy picking up a bit, 2010 was still a rough year for most funeral home owners. If their call volume was good, the margins were still smaller than they wanted and the bottom line suffered.
It’s pretty obvious….it’s time for a new plan.
In this article I am going to describe 5 strategic planning myths that are common among funeral home owners and managers.
Myth #1 – Families don’t have any money
There is no doubt that the economy has hurt a lot of families. Rampant unemployment, stock market ups and downs, and the crash of the housing market have combined to wipe out the nest egg of many families.
Why is it then that the average amount spent on a wedding in 2010 an all time high of $27,852? That’s a 100% increase since 1990.
Why is it that while Chrysler and GM were in bankruptcy, the sales of luxury cars like Ferrari and Rolls Royce were at an all time high?
The reality is that some families do not have money. But an awful lot of families have plenty of money they simply don’t understand the value of a visitation and memorial service so they won’t spend their money on it.
The point is that designing your business assuming that no one has any money is a huge mistake. There are still lots of people with money and one of the goals of strategic planning is to figure out how to attract as many of those people as possible to your funeral home.
Myth #2 – If I just give it time…the business will come back
This is sometimes called the ostrich approach to business management….stick your head in the sand and hope the problem goes away.
I believe the funeral home market has fundamentally, and irreversible, changed over the past decade. This change is primarily driven by the fact that baby boomers are now making the decisions in the arrangement conference.
The basic nature of a baby boomer is that they always challenge traditions. They did it in the 1960’s, the 1970’s and they continue to challenge traditions today.
The fundamental problem is that most baby boomers do not understand the value of a funeral service. If they do not understand it….they cannot embrace it….and they will not spend money on it.
Very few businesses have the power to dictate the direction of the market (Apple is one of the rare exceptions these days). The rest of us have no choice but to constantly reinvent ourselves to satisfy the changing needs of our target market.
The first baby boomers just turned 65 and there are 76 million more on their way. It’s going to take 20 years for this wave to pass through the funeral home industry.
You could plan on just giving it some time. But a better plan may be to figure out how to serve the baby boom market so that your business survives to see the next generation.
Myth #3 – I just need to plan my advertising budget
Well you could…..but you’ll probably end up wasting the money.
Many business owners think that marketing and advertising are the same thing. That couldn’t be further from the truth.
Advertising is a small subset of the overall marketing process. Advertising’s job is to make your phone ring. But marketing is focused on the entire revenue generating process. You don’t make money because someone called your funeral home. You only make money if you actually serve the family.
I like to start any strategic planning meeting by asking for the numbers. How many times did the phone ring? How many of those became a call for your firm? How many of those choose to have a visitation and/or memorial service? How many of those families referred others to your funeral home?
Studying these numbers tells you where the biggest problem exists.
Rather than planning your advertising budget you really need to plan every step in your marketing process and then determine what budget you need to support the entire process.
Making your phone ring is a nice first step….but it’s not going to pay your mortgage.
Myth #4 – All I have to do is copy the industry leaders
Every industry has their leaders. In the funeral home market there are a handful of very successful private firms that serve 1,500 to 2,000 or more families every year and operate a highly respected and profitable business.
As the recognized funeral home market leaders, these firms are studied carefully by the rest of the industry. Every move they make gets copied dozens or hundreds of times all over the country.
There’s one critical flaw in this process….what works in St Petersburg Florida may not work in Racine Wisconsin. And what works in Columbus Ohio probably won’t work in Portland Oregon.
We like to think of ourselves as a melting pot society but the reality is that we are far from being homogenous. Granted there are many similarities but there are also many significant differences. This is especially true when it comes to how a family deals with the death experience.
Direct cremation rates vary from state to state. But they also vary from city to city and even neighborhood to neighborhood (especially when you factor in the preferences of different ethic groups).
Copying the leaders in the industry will only work if their market and your market are identical. Otherwise, it’s a recipe for disaster.
The leaders are successful because they developed and implemented a strategic plan that was specifically designed for their local market. It may be an excellent plan but it will still have be customized in order to be successful in your market.
Myth #5 – Strategic planning is best done at a resort
Why do the well-established funeral home marketing firms only make matters worse by encouraging their clients (i.e., you) to combine their strategic planning with a vacation?
Don’t get me wrong, I LOVE a good vacation. I also like it when I can make a portion of it tax deductible by combining it with an educational event (that’s not tax advice please consult your cpa).
Learn a little in the morning, join the family on the ski slopes in the afternoon…it’s not a bad way to spend a few days. The problem is that this is a horrible way to do strategic planning!
An effective strategic planning session requires three important elements.
First, it is always best to do your planning with the help of an outside facilitator. When owners try to do this by themselves, or with their management team, they always get bogged down on the details of one controversial topic and never complete the planning process.
The second important element is that the facilitator needs to have a game plan or agenda for developing the strategic plan. Creating a plan is a step by step process of defining your target market, analyzing this market, and designing your business model to deliver value to that market at a reasonable profit. Next, you have to define a marketing message and implementation strategy that will attract the right kind of families to your funeral home. Without a game plan for the meetings you may have some good ideas but you will never end up with a complete strategic plan.
The third element of a successful planning session is that the participants must be able to focus.
You absolutely MUST be able to focus on your business without interruptions in order to develop a new strategic vision and a plan for getting you there. As Michael Gerber says in his book The E-Myth it’s time to work “on your business” instead of “in your business”.
The vast majority of funeral home owners I have met are consumed working in their business; meeting families, conducting services and managing staff.
Creating a strategic plan requires you to work on your business; studying your market, designing your message and defining exactly how you will deliver something of value to your customers. Since this isn’t something you do every day, it is going to requires a focused effort.
When I’m working one on one with a client, I will typically suggest that we hold a two day planning session off site at a nearby hotel or conference center. The goal is to get you away from your funeral home so that you can focus on the planning process rather than being distracted every time you hear the phone ring. I like to take a tour of your funeral home so that I get a better sense for your business but we should only hold the meeting there if you have a truly private area where you won’t hear the phones.
I have facilitated strategic planning sessions at resorts and it simply does not work. The participants all start out with the best intentions but by mid afternoon they’re thinking about what their family is doing outside of the room and planning their evening.
You can take your facilitator to the resort with you, he or she can bring their proven process with them, but expecting your management team to focus for two straight days in that environment is unrealistic.
To recap….the five big myths of creating a strategic plan for your funeral home are…
Myth #1 – Families don’t have any money
Myth #2 – If I just give it time…the business will come back
Myth #3 – I just need to plan my advertising budget
Myth #4 – All I have to do is copy the industry leaders
Myth #5 – Strategic planning can only be done at a resort
Your mission is to serve families at their time of need. Yet you cannot do that if you are no longer in business.
I encourage you to develop a new strategic plan for your funeral home business as soon as possible. It’s time to work “on your business” instead of “in your business”
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