Funeral Director & OGR Member Resources Director Laine Phillips shares his thoughts for preparing your funeral home for 2017.
What’s the financial health of your funeral home? Do you know?
In today’s economically challenging world, it is imperative that you know the health of your business. In my travels across the country, I have found that a high percentage of funeral home owners do not track the important numbers of their businesses or have yearly budgets. This is not a knock on those businesses, just a wake-up call.
In this post, I will give you five easy-to-start steps that will help a funeral home owner who is not tracking his/her business get started without having to be an accountant. The tips focus on key financial indicators, that if watched for 12 months, will reveal trends in your finances before it’s too late to correct them.
Once you have tracked these numbers for a year or so, you will have a better idea of the call mix of your business and costs associated with that mix.
I want to make sure you, the reader, understand, these are beginning steps in understanding your funeral home’s financial health. Whether you have advanced past these suggestions or are just getting started, you can contact OGR’s office for more advanced assistance through OGR’s new “Golden Rule Road to Success Series”. The “Road to Success Series” is part of our strategy to help independent funeral homes across the world stay in business by helping them adapt to the ever changing wants and desires of the families they serve.
Understand your call mix.
- Identify how many families you serve who request a traditional funeral with embalming. This would be how many of your families choose a church, chapel or service at a neutral place, e.g. country club, VFW, etc.
- Track the number of families who choose cremation. Record if they choose a full church / chapel service with visitation and their loved one present, a direct cremation, or a memorial service at a church/chapel/other location.
- Record the number of graveside services you do and whether they include a viewing or take place only at the cemetery.
- Finally, how many people do you ship in/ship out? Do you provide a service for them? Or do prep and ship only?
Record service charges and merchandise totals on every call.
- Record all service charge items (e.g. service total, vehicle total, prep-room charges, additional charges for building use for catering or extra days for visitation, overtime/weekend charges).
- Record all merchandise items each family selects (e.g. casket, urn, vault, flowers, catering, register books, headstones/grave markers, etc.).
Keep a breakdown of employee payroll each month.
- Record per pay period how much you pay each employee and the total number of hours worked. Be sure to note any overtime pay and hours the employee received during that pay period.
- Track any types of incentives you give your employees such as special recognition rewards, lunches, and extra days off.
Record COGS (cost of goods sold) for every month.
- Record the cost of everything you purchase that is then made available to the families you serve. This will help you when it comes to merchandising the selections you offer to your families.
- Track the amounts you pay for any day-to-day office business expense other than payroll.
Once you have tracked this area for a while it is one of the quickest ways to make a change if you are out of line with your expenses.
Record your monthly bills.
- Identify how much you spend on utilities for your funeral home each month.
- Track the money you spend on caskets, fluids, and sundry supplies.
- Record what you spend on maintaining your cars (maintenance, registration, upkeep, insurance, and other payments.)
Above are examples that will help you get started. Be sure to record reoccurring monthly costs.
In my 30+ years in this wonderful business, I have been called on to take over funeral homes that were in a financial tailspin. I was always amazed at how much of an immediate and positive impact I could make on a funeral home’s finances by simply looking at these few items.
We all know running a business is not rocket science. These suggestions may seem very simplistic to you who have owned your own business and in fact they are, but you would be amazed how many folks forget to do the basics.
Never forget, we can sit in the back office and count as many beans as we want, but it all starts with EXCEPTIONAL SERVICE!
By Laine Phillips
OGR Member Resources Director