The largest expense for funeral home overhead is payroll and employee expenses. Unfortunately, many funeral home owners poorly manage this facet of their business and in doing so not only decrease profit but place themselves in peril for labor lawsuits. Some firms over-staff which puts pressure on margins and others under-staff which places the owner in violation of Department of Labor violations. Speaking of the DOL, we are only weeks away from significant rule changes that have effect on the majority of funeral homes in the United States. Below are three highlight of the changes that take effect December 1st:
- The minimum salary level an employee must earn to qualify for overtime will change from $23,600 to $47,476.
- Highly compensated employees have a new minimum earning level requirement of $134,000
- New mandatory mechanisms to increase levels of compensation will trigger every three years.
What does this mean? Frankly, in many cases it’s going to cost funeral home owners more money to operate their business. This means that the three basic tenets of running a business come into play; raise prices, conduct more calls, or cut costs. Some owners will ignore the regulations (just like the 25% violating the FTC rules) and do nothing. However, if owners choose to operate hoping that a director will not keep his or her notes regarding overtime worked without just compensation, those owners are really placing themselves in a bad position.
I have found in my practice as a funeral and cemetery consultant that many owners think they have covered their bases by having an employee handbook (which has not been updated in years), assigning “exempt” status to employees that don’t qualify, and refusing to get professional advice or council. As I have said many times, I find it interesting that funeral professionals chide families for “buying cheap” or using other services/products than what is offered at their particular funeral home. You know the, “You get what you pay for crowd.” But when it comes to hiring professional experts in subject matter other than funeral, they themselves “cheap out” and regularly fail at the “DIY” method.
Folks, these new Department of Labor changes in overtime status are serious and could have grave (yeah, deadly) consequences for funeral homes if employees are not compensated properly. If you think that having a state inspection is a big deal, try having the federal government on your ass because of an employee complaint. One way or another, funeral home owners are going to have to write checks; when and how much will only be determined based on following the regulations.
From the Command Post (West), Cheers Y’all! #thefuneralcommander
My last post Funeral Industry David vs. Goliath was referring to innovation in the funeral industry. From all intents and purposes, Goliaths dictate and Davids innovate. There is no greater example of this analogy in the funeral business than casket manufacturers. Just recently one of the casket Goliaths was recognized for their “innovation.” What is innovation?
Webster’s Dictionary: Innovation; a new idea, device, or method.
Have we become so complacent in our industry that throwing “old wood” on a casket is considered innovation? The definition should be expanded to include making products for less cost (Chinese hardware and cloth for interiors) and moving South of the Border for manufacturing. YES! Now that’s innovative; however with these cost saving measures why are you paying more for Goliath Company’s caskets?
There was a time when the casket peddlers led the industry with messages that their product was “the center of the world” and families would pay premium prices. At that point in history (before Al Gore invented the Interweb) funeral home owners drank the Kool Aide by selling families Bronze, Copper, Stainless Steel, and Mahogany caskets even some adorned with gadgets. Good idea, right? I mean, the profits from these transactions had to be incredible. How’s that “innovation” working out for ‘ya today? Funeral homes filled their casket rooms (later to become known as Hallmark Stores) with good, better, best, and ignoring the service side of their business. What did the Goliath’s do? After the contracts were signed and the rooms were filled, prices began swelling faster than a Krispy Creme doughnut in hot oil. Fast forward to 2016; when was the last time your firm sold a Bronze, Copper, or Mahogany casket at need? In fact, exactly what material (Gauge or Wood type) is the average casket your firm sells now? Now Goliath’s are spewing “don’t raise our prices, raise your service prices” as they hand you the new X% more casket price-list for 2017.
Interesting that the casket Goliath’s even attempt to be “business consultants,” however 90% of the road warriors haven’t a clue how to interpret a funeral home P&L, much less understand the process of operations. Perhaps I should create a “funeral home business and operations quiz” so that the next time Skippy the Casket Clown knocks at your door, you may find out just how much he knows about your business. The results of the quiz will be devastating to Skippy. But no fear! Skippy will reach into his bag to reveal that he can improve your website (with a template), increase your cremation revenue (with his company’s Chinese urns and “proven presentation strategies”) along with various and sundry useless items for sale. Innovation would be to improve the funeral home operating processes and providing solutions to elevate the positive financial posture for profitability. Wait! Maybe a trip, game tickets, or a nice meal will make everything better.
Let’s get down to the truth, shall we? Caskets are made of wood or metal (unless you get the ones made in Mexico, they are wood composite). The definition (according to my indoctrination in the cornfield) of a casket is “a container for precious materials.” The deceased (precious loved one) is placed in a casket, their loss mourned, their life celebrated, and they are buried never to be seen again. If your funeral home’s financial life depends on one of Goliath’s spawn, your business will be in a container for precious materials as well.
What would be innovation for caskets? How about finding a way to manufacture a quality product for less? The casket manufacturing Davids have already done so. A simple price analysis and side by side comparison of local distributor, small manufacturer, or offshore caskets will reveal Goliath is out of touch and David has an arsenal of rocks in his sling. Oh yeah, one more “innovation” that Goliath created: “off brand” caskets that are sold through the local distributors. Yep, the same casket you may be paying up to 50% more with a 1-cent sticker comes right off the manufacturing line as the “off brand” does.
Thanks to the itnerweb and frankly, enlightenment of funeral directors, the casket Goliaths are taking more rocks to the head from the casket Davids. The Goliath notion of treating funeral directors like mushrooms (“keep ‘em in the dark and feed ‘em crap”) days are coming to a close.
I am more than happy to further this line of factual thought with anyone that chooses to reach out to me. I challenge any Goliath representative to a public debate on Funeral Nation TV to refute these points of innovation. What the heck, its debate season so the floor is open!
From the Command Post (West), without libation or cigar for clear thinking, Cheer’s Y’all! #thefuneralcommander
In my funeral business consulting practice one of the most frustrating phrases I hear from funeral home owners and managers: “Oh, my local guy handles our accounting.” I take a deep breath and think, “your local guy doesn’t know a rough box from an alternative container, yet he is in charge of your business’ financial advice?” A Profit & Loss statement tells a story for a funeral home. However if your accountant doesn’t know the language it’s doubtful the next chapters are going to change and the story is going to end poorly. The average funeral home makes 7% profit; if your funeral home is at or below this average then you need to consider changing your accountant.
- If your accountant has not addressed the comparison between your current year budget/forecast (if you have one), current year actual activities, and the last few years…YOU GOT THE WRONG ACCOUTANT!
- If you your accountant does not provide you with analysis and suggestions of where to reduce cost and increase revenue (making profit) on a regular basis… YOU GOT THE WRONG ACCOUNTANT!
- Take a look at your P&L and compare it to the same month last year and the year before. If your funeral home is not making more money versus years past… YOU GOT THE WRONG ACCOUNTANT!
- If your accountant can’t look at a trocar and casket key and identify what they are…YOU GOT THE WRONG ACCOUNTANT!
So, ask yourself; am I going to keep doing the same thing over and over again because I’ve always done it this way? It’s time to raise your hand and “have the talk of a lifetime.” Save your funeral home from declining profits and let’s have a chat… firstname.lastname@example.org.
From the Command Post (West) and a cigar just waiting to be lit, Cheers Y’all! #thefuneralcommander
As a funeral consultant, I interact with at least 25 funeral home owners on a typical week and through social media I’m in contact with hundreds of funeral directors. When I ask, “What’s the biggest challenge you face in the funeral profession?” almost on key I hear, “cremation is killing us.” Cremation is by no means the major challenge we are experiencing, it’s our failure of “doing the business of the business.”
Let me explain by asking questions.
- Cremation is a disposition. As such, funeral directors have the same opportunity to embalm as burial. Why doesn’t that conversation take place during cremation arrangements?
- Why do burial families pay full price for basic service fee and cremation families get a discount on the exact services performed?
- Why doesn’t every family receive a complete presentation for disposition of cremated remains including interment, scatter, keep, urn, and jewelry options?
- Why don’t funeral homes get paid in full or secure payment prior to signing a goods and services contract?
- Why don’t funeral directors train on their profession (not CEU) weekly to improve their skills (like the four questions above)?
- Why do funeral home owners pay accountants that give them a P&L statement and balance sheet but no advice on how to increase their profit?
Take a moment and answer these questions honestly. It’s not cremation; put some mirrors up in the funeral home and you’ll see the problem. Do you want solutions to these problems? Email email@example.com and let’s schedule a time to chat.
From the Command Post (West), Cheer’s Y’all! #thefuneralcommander
Is the funeral industry trying to reflect or define funeral consumer demand and trends? I was provided inspiration for this post while watching a political show recently where the moderator was interviewing a Presidential candidate. The line of questioning was how certain “Washington outsider candidates” with a combined vote count (from both parties) are receiving such an overwhelming number of votes versus the “establishment” candidates. Further, the “establishment” leaders are bewildered because the will of the people is not aligned the establishment ideals. The interviewee’s answer: “The people are rejecting the notion of we’ve always done in this way with their vote.”
As a whole, the funeral industry is in the same mired quandary. The funeral “establishment” is in full attempt defining what consumers want rather than reflecting market demand. No? Last week I posted Use a Computer for Funeral Arrangements? That’s Unprofessional! causing quite a vigorous debate between funeral directors about writing or typing. Yesterday I visited a well-established funeral home in a small town and it is the market leader (volume 250+ calls). When I inquired to the owner about what changes he is witnessing he shared with me that in this traditional, high burial church attending town, cremations are on a significant rise (not a surprise). However, he went on to say that visitations have sharply decreased stating: “I don’t know why I need all this room here, people are just not acting like they used to.” According to conventional wisdom, he should be charging more for visitations and showing more value (maybe free cookies) which would certainly turn the tide.
It’s not just funeral directors that are part of the “establishment” because vendors and manufacturers are of the guilty ilk as well. Without a doubt, the upcoming ICCFA Annual Convention & Exposition in New Orleans will have the “newest and best” line of caskets that families will love turning in the showroom like crazy making a significant difference to the funeral home’s bottom line. Yet, in 2016 cremation will eclipse burial as the consumers choice as final disposition.
Think about this: what exactly is the “establishment” vendors and manufacturers doing to address the real challenges that funeral providers face? If you haven’t a clue what those challenges are, see Serious Funeral Home Barriers to Success for a start. Unfortunately with all the R&D funds (used to find someone else that has invented something new), it’s the same people selling the same stuff to the same flock of sheep. No answers; but one can hear whispers of The Orchestra is Lovely as the ship continues to sink.
However friends, there are sunshine rays peeking through murky clouds of the funeral industry future! I actually saw a very well established, multi-location, legacy generational, family owned funeral home create their own cremation internet business to consumers in their market! I am also privy to several funeral home owners initiating deep dive diagnosis of their business for their future financial and operational health. We are witnessing some of the flock being healed from their accounts receivable and discount afflictions! PRAISE THE LORD, there is hope!
Now the serious question needs to be asked, please close your eyes. Search deep into your heart and ask yourself “Am I really trying to adapt and provide what families I serve are asking for…or am I just repeating those painful actions of “We’ve always done it this way?” Friends, it’s never too late to see the light. I urge you, repent and change your ways! You can walk in the sunshine of the future and out of the darkness of the past. Amen.
From the pulpit with a cigar in hand and preaching to the congregation in the Command Chapel located on the Battlefield of Funeral Industry Innovation, Cheers Y’all! #thefuneralcommander