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