The subject of this article is most interesting for a couple of reasons; one, most funeral directors do little strategic planning and, two, even less prepare an annual budget. I have spoke about this subject for many years but see little progress. The typical modus operandi for most independent operations is to keep things just the way they are. It’s worked in the past to some degree. However, it probably will not work in the future.

Why? The consumer is continuing to change. We are now beginning to serve the “baby boomers’  who, by and large, see less value in the funeral than their parents and grandparents. Many are opting for cremation and those that still desire a funeral with burial are opting for less expensive options. My biggest fear is that if this continues to broaden, the children of the “baby boomers” may truly catapult this trend in a more negative trend for funeral directors around the country.

So what do you do? The answer is twofold. One, every funeral director around the country must do the very best they can in providing excellent service to the families they serve. In the words of Alan Wolfelt “create meaningful funeral experiences.” Those funeral directors who are practicing this type of service are more than likely going to see the return of the family just serviced. Those who just do the regular funerals of the past stand the chance of losing that family forever.

The second piece of the puzzle is that we all must become better business people. That includes the strategic planning and budgeting topics. So what is meant by the words “strategic planning?” There are many formal ways to do this type of planning which you can find in a variety of books. However, I have found that the more simple you make the task, the more likely you will get it done. So here is a process that I have used when performing strategy sessions for the many funeral homes I have owned in the past. Hopefully it can work for funeral directors who are about to embark on their own strategic plan.

First you need to remember that there are basically two types of planning, strategic and tactical. The strategic process looks at a longer horizon, five years or more. What would you like to see your company look like in years to come? The Tactical plan is the more immediate future of the company, a one or two year focus. As I believe the nature of this article was to assist funeral directors in the strategy of planning in general, I will focus more on the short term piece of the puzzle.

The steps are pretty basic. You need to look at all facets of your operation; levels of service, pricing, merchandising,  competition, market share, preneed, cremation, demographics, etc. as well as all the financial components of your business, including but not limited to, average sale per type of service, cost of goods sold, labor costs, facility costs, funeral costs, advertising, promotion, accounts receivable, etc. List all of these items in a formal document, as well as anything else you want to consider, and ask yourself the following questions per listed item.

Where have we been in the past?

Where are we presently?

Where do we want to go in the future?

How will we get there?

Make a commitment to follow through

Review your plan on a regular basis

It basically asks you to do a SWOT analysis of your company. That being, take a look at your Strengths, your Weaknesses, your Opportunities and your Threats.

Although this sounds rather simple to sit down with your key personnel and go through this process, it takes time and energy to do so. However, once the task is completed, you now have a roadmap for your upcoming year. The hardest part that I have seen for those new to the process is the commitment stage. They go through the exercise of reviewing their firm in detail and put together their plan. However, once things get a little hectic back at the ranch, they put the plan in a file and just do things the way they always have.

So where does the budget process fit in? It is basically the financial commitment to achieve your plan. It is a proven fact that businesses that plan and budget do better than those who do not. That is why I am puzzled by the fact that there is so little of this process in funeral service. Regardless, you need to do an annual budget to assure that you can support the plan that you have put together. It should be completed line item by line item in your financial statement. All the costs and all the revenue producing items. Per item, look at where you have been, where you are, where you are headed, make your adjustments for the future and commit the result to your budget. Once completed, you now have the operational plan and the financial plan for your upcoming year.

The final step is to then review your plan on a regular basis. I would suggest you have a formal review every 3 months, but be sure to take a look at the end of each month for anything that is peculiar. Don’t be rash in adjusting your plan if things get off to a slow start. That can happen in funeral service as we all know. At the same time don’t be slow to react if an adjustment is needed.

Remember that those companies that plan and budget, no matter how large or small, will do better than those that do not. Therefore it is only logical that you should plan and budget. Yet so many times the Scarlet O’Hara syndrome seems to take place. That is “I’ll worry about that tomorrow.” Well tomorrow is here. The service and financial landscapes of our profession are being challenged. Become a better business person. It is a great time to do your planning now for 2012. Your future depends on it.