funeral service business or industry?. funeral service business or industry? whatever it is, we...
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Funeral Service
Business or industry?
Funeral Service
Business or industry?
Whatever it is,
we (funeral directors) are it!
Funeral Service
As small business?
What about?
Conglomerates
or consolidators (a better term)
Multi-unit operations
Combos – combination operations
Combos
FH/cemetery combos = <20% in US
(higher in Canada)
handle 30% of traditional funeral business
Small business(Quantitative description)
has less than 500 employees(100 – 500 – 1000 depends on the type of
business)
Revenue < $7 million(range is $750,000 - $29 million)
Other characteristics?
independently owned and operated not dominant in its field of operation
(qualitative description)
Examples
Funeral homes/cemeteries $7 million
Supermarkets / Dep’t Stores
$25 million New car dealers
$29 Million Banks – based on assets
Service Corp. International2008 10K report says: 12% market share in North America
1302 fh (12 in Germany) 369 cemeteries (208 are combos)
43 states, DC & PR
NJ – 20
PA - 17 + 8 Canada & 12 Germany
Stewart Enterprises, Inc.
2008 10K report says: 218 FH in 24 states & PR 140 cemeteries Operate premier facilities in terms of factors
such as tradition, heritage, reputation, physical size, volume of business, available inventory, name recognition, aesthetics and/or potential for development or expansion
2000 Census data says
there were 5.7 million firms with employees and 16.5 million
without employees
More
only 1/3 of all family businesses are passed on to a 2nd generation
1/10 of those reach the 3rd generation
( = 3% of the original number)
Manager responsibilities
Market analysisOperational analysisFinancial analysis
MARKET ANALYSIS
Demographics:Who makes up service area?Where do they work
Economic baseReligion
Travel patterns
Death rate Who do you serve?
Population trends/projections
Competition (competitive colleagues)
Social & business climate
Site selection
OPERATIONAL ANALYSIS WHAT KIND OF WORK DO YOU DO?
Complete funerals v. ????Welfare/transfer
cases/children/direct dispositionCremation / entombment
/visitations, embalmingMemorial services
% Merchandisecasket / vault / urn
Use of facilities/graveside Motor equipment use Who performs what tasks?
Other services?video / pre-need / Celebrantlivery / trade workinsurance
Staffing / who performs what tasks?
FINANCIAL ANALYSIS Identify trends
Sources of revenue v. expenses
OVERHEADFixed v. variable costsHow are bills paid?Are you solvent?Is loan necessary for expansion
Unnecessary expenses?
It’s more than PL Statement and Balance Sheet!
LIQUIDITY ASSET MANAGEMENT DEBT MANAGEMENT PROFITABILITY
Liquidity
INDICATION OF FIRM’S ABILITY TO MEET SHORT-TERM OBLIGATIONS
ASSET MANAGEMENT
aka OPERATING RATIOS
INVENTORY TURNOVER
AVERAGE COLLECTION PERIOD
AGING OF RECEIVABLES
DEBT MANAGEMENT
INDICATION(s) OF THE FINANCIAL RISK THE FIRM IS TAKING
PROFITABILITY
Return on Investment (ROI)
Return on assets (ROA)
EBITA
(Earnings before Interest, Taxes and Amortization)
What consumers think
51% want to pre-plan their funeral, but have not done so yet
40% want a “casual” atmosphere at their funeral
12% think funeral directors are “exploitative” and “manipulative”
19% say FD’s “prey” on the bereaved 47% don’t care about memorial products
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