Since COVID-19, the economic landscape has changed drastically. Government stimulus injected large sums of money into the economy, helping individuals and businesses alike. At the same time, inflation surged, the workforce evolved with remote opportunities, and the way we live—and work—was permanently altered. These changes are certainly visible within the funeral profession.
Just like grocery stores and other sectors, funeral homes are feeling the squeeze. Prices for goods and services have risen. However, unlike other industries, funeral service hasn’t seen a proportional increase in the average sale, especially with cremation preferences continuing to rise and pricing pressure mounting. In many cases, the average sale has remained flat.
Meanwhile, expenses are rising. Payroll, for instance, has increased by 5% to 10% as a percentage of net sales—a significant shift. Vendor costs are also up, across the board: facility maintenance, advertising, vehicle upkeep, and general administrative expenses. And let’s not forget—families are feeling the same financial pressure. When their time of need comes, they may have fewer resources than in the past, further impacting how they engage with funeral services.
This all begs the question: Will these pressures accelerate cremation growth even more? How can businesses adapt and maintain profitability in this environment?
I’ve long believed that a crisis is a terrible thing to waste. And this certainly qualifies as a crisis. Historically, the funeral profession has had a high barrier to entry—but with rising costs and inflation, even that landscape is shifting. There is an increasing presence of real estate values exceeding business values. Starting a new location or remodeling an existing space now comes with a much higher price tag.
And let’s talk about one of the biggest challenges today: staffing. Finding and retaining good people has become more difficult.
So, what do we do?
We don’t give up—we get strategic.
Now is the time to look inward and evaluate the areas of your business that can drive better performance:
- Pricing & Packaging: Consider structured package pricing to boost your average sale without simply raising prices. It’s one of the most effective tools we see in our consulting work.
- Incentive Compensation: In today’s market, competitive pay is essential. Structured bonus or incentive plans allow you to reward employees when times are good, while protecting the business when times are lean.
- Budgeting & Cash Flow Management: With inflation and cost pressures, budgeting is no longer optional—it’s essential. Are you reviewing your 13-week cash flow regularly? This level of detail helps you use cash strategically, whether it’s for investment or survival.
- Debt Management: Refinancing your debt could free up vital cash flow. What are you doing to make sure your debt structure is optimized?
And finally, reach out for help. Whether it’s through your state association, national groups, or working with a consulting firm, there are tools and strategies available—you just have to ask.
The good news? If you take care of the families you serve, they’ll take care of you. But now more than ever, we must ensure the financial side of the business is dialed in. The goal isn’t just to survive—it’s to thrive.
Contact us today!