I read a funeral industry article this week in which the author said that most funeral home owners are dissatisfied with their business ownership responsibilities. They wish they could focus on serving families instead of running a business.
That makes complete sense when you consider that the average NFDA member funeral home serves 113 families annually, has revenues of roughly $750k to $1M, and has three full-time and four part-time employees.
$1M in revenue sounds like a lot of money. Unfortunately, for most funeral home businesses, it’s not. When you pay your mortgage, staff, suppliers, taxes and a decent income for yourself, there’s not much left over.
Over the years, I’ve helped clients of all sizes. Most of them have had revenues around the $3M/year to $5M/year mark. But I have had plenty of clients who were only doing $500k/year and others doing $10M/year or more.
Here’s the pattern I’ve found…
The owner doing $500k/year is usually happy. They have a good small business with one or two employees and personally serve most of the families.
The owner doing $10M/year is happy. They’ve built a solid management team that runs the day-to-day operations. That leaves them time to explore new business opportunities and even take some great vacations.
The owner of a funeral home business doing between $500k and $10M is stuck in the frustration zone. They spend their day solving an endless list of operational problems. They also meet with families when it’s their time on the schedule and struggle to find a work/life balance. No wonder they’re dissatisfied!
I specialize in helping funeral home owners grow their businesses. I also have a network of business and marketing consultants who serve other industries. My fellow consultants all have similar stories. Their happiest clients are either doing less than $500k or more than $10M. Everybody in between feels like their running on a treadmill with no end in sight.
The vast majority of funeral home owners are licensed Funeral Directors. They started their careers caring for families every day, loved it, and eventually bought their own funeral home. That’s when they discovered that being a Funeral Director and being a funeral home owner are completely different roles.
In fact, the skills that make you a good Funeral Director can cause serious problems when you use them in your ownership role. For example, being compassionate is a great skill when you’re a Funeral Director working with families. But compassion won’t help when you find out that your accountant messed up and you’re now faced with an IRS audit.
Most funeral home owners are treading water. Their business isn’t growing, and they’re frustrated.
Frustrated owners have two options; shrink the business to the point where they can easily manage it or grow it. I help owners who choose the second option, i.e., grow their businesses. I call them Funeral Business Builders.
A Funeral Business Builder has different skills than a typical owner. The good news is that they are all skills that can be learned. Here are five skills a Funeral Business Builder should develop.
1. Event management
Successful funeral homes operate in the Experience Economy. Their core product is the ability to design, create, and stage personalized memorial events for families. A Funeral Director plays a role in the event, but the owner must ensure that every event is perfect.
2. Staff management
A multimillion-dollar funeral home is going to have dozens of employees. Recruiting, training, managing, and terminating employees is the owner’s responsibility. Eventually, they can put an Operations Manager in place, but in the meantime, it’s the owner’s job to assemble and manage the team.
3. Financial management
Building a business requires the owner to monitor their finances closely. Unfortunately, I have met many owners who have complete faith in their bookkeepers and don’t pay enough attention to their numbers. That’s a really bad idea!
They might do ok during the good times, and there’s lots of money in the bank. But they will always struggle when times are tough because that’s when careful financial management is the name of the game.
4. Marketing
Keeping your phone ringing with a steady stream of prospective families is ultimately the owner’s responsibility. They can bring in consultants like me to help define a strategic plan and outsource parts of the implementation to various vendors.
However, the owner must always understand the overall process and take the lead on any grassroots or community marketing. Nothing beats an owner who will shake hands with an influencer (clergy, hospice, community leader, etc.) and nurture relationships in their local community.
5. Opportunity Evaluation
The reality of today’s funeral home market is there are a lot of owners interested in selling or they will be in the next few years. That means there is no shortage of opportunities for a Funeral Business Builder to acquire competitors and expand their business. However, acquiring another funeral home is not always a good idea, and they are often worth a lot less than the current owner thinks.
I believe that being able to evaluate opportunities in the funeral industry is an important skill for every Funeral Business Builder to develop. There are dozens of factors, such as whether it makes sense to buy the other funeral home or just build a competing funeral home.
Building a funeral home business to the $10M/year level may sound like a goal far beyond your reach. But after working with many owners who have achieved that level, I can tell you that the only difference between you and them is that they learned a new set of skills.
If you are stuck in that $500k to $10M frustration zone, you have two choices. You can shrink until your business is small but manageable or become a Funeral Business Builder and grow past the $10M as quickly as possible. Contact me if you choose to pursue the latter.
Until next time
John
