Is your funeral home an asset or a liability?
I’m not referring to your business. I’m referring to your physical building.
Is it an asset because it generates a profit for your business?
Or is it a liability because it consumes your money but does nothing to grow your bottom line?
Most, but not all, of my clients own their physical buildings. If they don’t own the building, their lease typically includes an option to buy.
In many cases, a creative accounting person has helped them structure their assets so that one legal entity owns the business and another owns the real estate. This makes it easier if you want to sell the business but not the real estate or vice versa.
The question I’d like you to consider is…
Is your building helping your business grow? Or is it a boat anchor preventing you from moving forward?
Many funeral home owners have told me that their building is not used for services as much as it used to be. In those cases, you have to take a hard look at the numbers and decide whether it makes sense to hold onto the building or to sell it. After all, you can only carry a boat anchor for so long.
Here are a couple of examples…
I did a project with a funeral home business in rural Iowa a few years ago. They had four small funeral homes in small communities, plus a large 100-year-old funeral home in a larger community.
The four small funeral homes were not staffed unless a service was scheduled, and the upkeep was minimal. Strategically, it still made sense to keep a presence in the outlying communities served by those funeral homes.
Unfortunately, the large funeral home required constant maintenance and was sucking up every dollar of profit in the business. To make things even worse, they rarely used the building for visitations or funerals because the local churches offered a more comfortable setting.
In this case, the large funeral home was a clear boat anchor and wasn’t helping the business grow. So I recommended selling the large funeral home and buying or renting a smaller, more contemporary building.
Another client I’ve worked with is in Sydney, Australia. In their market, most funeral homes are small storefront businesses. They will typically have a prep room, offices, and meeting space but will not have a dedicated place for visitations or memorial services.
In Sydney, the local cemeteries also have a chapel and a crematorium. My client typically schedules a visitation and ceremony at the chapel, and afterward, the family proceeds to the crematorium or a grave site.
When a family wants to do something special, my client has a suite of beautiful venues already vetted and ready to go. One of my favorites is a memorial yacht cruise on the Sydney Harbor. I’ll include a link to their website at the end of this article.
In this case, their physical building is neither an asset nor a liability.
One business I’ve been watching for some time is Lightened Arrangements. They offer creative funeral services held at various venues throughout the Chicago area. Once again, their physical building is neither an asset nor a liability because they use someone else’s venue for their services.
There are a handful of businesses like this popping up around the country. They offer what Baby Boomers want and, as a result, are well-positioned for future growth.
So if you have a funeral home building that is not used enough, but you don’t want to sell it, what can you do to turn this liability into a profit producing asset?
Here are a few suggestions….
#1 – offer wine and beer
Get a wine and beer license and start offering this to families. Yes, I know that is only possible in some states. But if possible, you need to get a license asap.
Baby Boomers do not want a somber visitation focused on the deceased’s body. Instead, they want a casual gathering and a chance to visit with the family. If you put a drink in their hand, they will be more inclined to relax and visit instead of paying their respects and leaving as soon as possible.
#2 – remove the rows of chairs
Rows of chairs are great for the ceremony but terrible for the gathering/visitation time. Instead of rows of chairs, use pedestal tables that encourage people to connect with each other.
You’re fortunate if your funeral home is big enough that you can dedicate one area for the gathering/visitation and another room for the ceremony. But if you don’t have that option, you will need to start with pedestal tables for the visitation and bring out the chairs when the ceremony begins. Yes, it’s more work for your staff, but it’s a better family experience.
#3 – get rid of the lines
The receiving line is still a fixture in some parts of the country and in some cultures. But for everybody else, it’s time to retire the receiving line and allow people to come and go as they please.
This is another generational difference. The GI and Silent generations were ok with standing in line and waiting their turn; Baby Boomers are not.
If you make those three changes, you can offer today’s families an event that feels like a cocktail party or a casual reception instead of their grandparent’s formal funeral experience.
Your building is an expensive investment. As a business owner, you should always look for ways to generate a return on your investments.
Start by making the changes I’ve suggested above. Then, if your utilization numbers don’t improve, it might be time to sell the building, free up some cash, and create the type of facility that Baby Boomers want.
Like it or not, Boomers are the future. You can offer what they want or accept that your building will continue to hurt your bottom line.
Until next time
John
https://www.elitefunerals.com.au/beautiful-farewell-on-sydney-harbour/
https://lightenarrangements.com/
