When I started in the casket business 20 years ago one of my many inspirations came from the book “Think and Grow Rich” by Napoleon Hill. Before his death in 1970 Napoleon Hill sold more than 70 million copies of his book and the book continues to sell well. Mr. Hill developed 17 principles of which he referred to as the “Science of Personal Achievement.” If you have not already read this book I would encourage you to pick up a copy and dive in as quickly as possible. There are also original recordings of this book on many services such as You Tube or Audible for listening on the go.
Funerals are steeped in traditions driven by factors like culture, religion, ethnicity and a host of others. The “business” of funerals is guided and sometimes harnessed through those factors. I love talking to professionals in and related to the funeral profession who like to talk about “the good old days.” They like to talk about how things used to be before cremation, the internet and social media. They talk about a time when the local funeral director ran a successful and profitable business. “Success” is a desirable goal yet can be extremely dangerous at the same time. There’s a great quote by Andy Grove, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” Napoleon Hill often speaks of a “burning desire” in many of his writings. This makes me think that “complacency” and a “burning desire” are polar opposites. In other words, having a “burning desire” means taking control of your mind whereas complacency “breeds failure” by resting on past success.
The traditions of funerals are not only in the “service” but also in the “office” of the funeral home. Many funeral homes run their businesses the same way today as they did 10, 20 and 30 years ago. Yes, it may have worked that way then (and quite successfully) but have you checked the “net profit” line on your financial statement lately? Nearly everyone agrees cremation has been a game changer. I’ve read several articles over the last 20 years that indicate funeral professionals have somewhat put their heads in the sand trying to ignore the fire that was consuming their bottom lines. By now we all know the cremation rate is growing and isn’t likely to level off any time soon.
Complacency in the “business” of funerals isn’t an option today. Funeral professionals must look at how they conduct business in new ways especially from a business perspective. With the focus on cremation and how to try and add services or sell merchandise and trinkets, there’s little thought given to other areas of the business when running a funeral home. The purpose of this article isn’t to tell you how to handle cremation in your funeral home as there are plenty of experts, summits and seminars out there marketing for that purpose. The purpose of this article is to get you to “think” differently than you’ve been trained by past experiences, internships and mortuary schools, and especially by your casket representatives about the business side of the funeral home. The number of funeral homes that close each year is alarming yet the number of deaths per year in the United States is at an all-time high of about 2.8 million according to CANA.
My opinion is that you as the owner or manager of the funeral home need to be in charge! Not long ago I met with a firm who was frustrated with merchandise the family was selecting. They told me their casket supplier placed 3 full size cremation caskets in the showroom. Immediately after hearing this news my mind went to the idea of “this might be good for the casket supplier but definitely bad for the revenues of the funeral home.” The funeral director went on to say that families are now selecting those cremation caskets for burial instead of purchasing traditional caskets. I told him it might be a good idea to get those off his showroom floor before the sun goes down tonight. The funeral director told me he thinks maybe offering ceremonial rental caskets would be a better option for them. I applauded him for thinking differently and encouraged him to make the switch as soon as possible. After meeting with the CFO of the firm we confirmed that adding ceremonial rental caskets to their showroom will likely add an additional $25,000 to $30,000 (conservatively) in revenue with most of that being direct profit to the bottom line. The beautiful thing about this is that they don’t need to serve one more family to gain this kind of revenue. I am simply amazed there are funeral homes who don’t use ceremonial rental caskets. I would go so far as to suggest offering a minimum of 3 different ceremonial rental caskets so that you are able to merchandise a “good, better, best” selection for your families to choose from.
I suppose there was a time when supply contracts with a casket suppliers was something to entertain. It is simply not true that a funeral home owner must sign a supply contract to get the best deal on caskets! Imagine for a minute that you signed a contract with a local store to buy groceries exclusively from them (why someone would do this I’ll never know). On top of tying your hands to this particular store, they also tell you how many grocery items you must buy in a year. Furthermore, if you don’t satisfy your quota commitment you pay a penalty. It just so happens the grocery store is also free to raise its prices every year while you are locked into your contract. Does this sound like a good deal? Let’s do a little analysis. You’ve signed your 3 year contract with your casket supplier and you are ready to save money. The first year you are buying a casket for $2,500 and then you are hit with a 4% annual price increase for each of the next 3 years. All of a sudden you are paying $2,812 for the same casket which is a 12.5% increase. How many funeral homes have had the luxury of raising service prices 12.5% over a 3 year time span? Factoring further that the cremation rate will most likely increase, and you will not need to buy as many caskets. But remember you committed to buy a specific number from your supplier. I spoke with a funeral director from New Jersey last week who told me he was invoiced $5,000.00 from his casket supplier because he didn’t meet his quota. Then of course there’s the “discount” game included in your contract. I’ve heard from several funeral directors who say it takes an act of Congress to determine exactly what the discount is depending on the casket chosen and a host of other factors. Take charge of your purchasing power. There are many options out there to purchase caskets. If your supplier can’t give you the best price without tying your hands to a contract, then I’d suggest you find another supplier who will.
Continuing with our theme of “thinking” differently, the traditional model of buying one casket at a time and having it delivered to your door is likely the most expensive way to buy a casket. Consider the possibility of buying caskets in quantity. This will take some thought, but the savings are well worth the effort. As an example, the industry has a common list price of around $3,000.00 for a solid wood button oak casket. Using the old-fashioned way of buying caskets you will pay about $1,800.00 if you can get a 40% discount. You can on the other hand buy in bulk and pay less than $1,000.00 for the very same casket. If you buy just 15 of this most popular model per year you will save $12,000.00. You’ll want to rethink how you merchandise caskets because you will now have an inventory in your garage you want to sell. Is it really necessary to have a showroom with 32 casket display cuts any longer? When purchasing in bulk managing inventory is key. The caskets you keep in your garage are also the caskets you display in your showroom or catalog.
Same goes for preneed and cremation. There is value in thinking differently there too yet this must be saved for another future article.
I think we can all agree the funeral profession has certainly taken a circuitous journey to arrive at the place we currently dwell. I encourage you to “think” differently about the “business” side of funerals. And most definitely seek new opportunities in making financial decisions that keep YOUR best interests in mind. FBA
Christopher J. Boots is the founder and president of CJ Boots Casket Company in Anderson, Indiana and is a shareholder of Vandor Corporation in Richmond, Indiana. He currently serves as president of the Casket and Funeral Supply Association of America and is the president of the school board of trustees for the South Madison Community School Corporation in Pendleton, Indiana. He loves reading and spending time on his boat with his family. Christopher can be reached at 765.683.9760, or email him at [email protected], or visit his website at www.cjboots.com.