Funeral Home Business Plan

Evergreen Life Memorial Center

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Strategy and Implementation Summary

Being staid and traditional has helped funeral homes in this area that have been in the same family for generations to develop solid reputations. The Center cannot compete on the basis of being just another staid, conservative funeral home. It will succeed by quickly developing a reputation for being unique, offering something that a largest segment of the decision-making market is beginning to demand and that traditional funeral homes are not positioned to provide.

Traditional funeral homes have not been structured to meet the need for social support the living need to move forward and to complete the process of grief by coming to acceptance. The Center will be structured around the need that Baby Boomers are expressing to gather social support and to celebrate life.

5.1 Competitive Edge

The Evergreen Life Memorial Center is the first of a new category of funeral providers in the Anytown area. The Center provides celebration of the individual and social support to bring closure and move ahead with life. It will be the place for the Boomer generation to celebrate life when it ends because it will be more uplifting and social than traditional funeral homes. It will thus live up to its slogan, "People remembering people."

There are three purposes of a funeral:

  • Bringing closure. Sociologists and anthropologists note that death rituals such as wakes, funerals and burials are important ways of of acknowledging that death has really occurred. This is necessary so people can move toward completing the grief process by coming to acceptance.  According to the Batesville Casket Company, "The funeral is about mental health and healing." 
  • Social support. Sociologists also say that these rituals help resolve guilt, anger and relationships. It's common for people to have feelings of regrets for what they did or didn't do during the deceased individual's life. For those attending the funeral, and especially for those choosing the kind of funeral to have, it's the last opportunity to do the right thing for the deceased. The funeral is also a time to gather social support for the survivors. Social support can reduce stress and solve practical problems. When someone dies, it leaves a whole in the fabric of a social system that needs to be filled.
  • Celebration. While traditionally funerals have been considered somber affairs, people are increasingly demanding more of a sense of celebration for the life of the departed. The funeral is an acknowledgement that the individual is gone, and may have been all that was needed when families lived close together. Since family's generally live far apart in modern society, a celebration is an opportunity for people who haven't seen each other in years to interact. It's a time for people to lightly reflect on the gift that person gave us by being among us. Refreshments lighten the mood and are a way of sharing. Pictures of the deceased help bring out memories and stories. There is laughter as well as tears, sometimes anger, so private spaces to meet in small groups are important.

These three purposes:  closure, social support and celebration are the ultimate products of the Evergreen Life Memorial Center. Traditional funeral homes have provided the rituals to bring closure, but have not provided the social support that is needed in modern times for the living to move forward and to complete the process of grief by coming to acceptance. The Center will be structured around the need for people to gather social support.

Traditional funeral homes are somber and morbid places people are afraid to go to.  Funeral homes that are staid and conservative will not be preferred by the "Pepsi generation," which laughed at parodies of such homes in the television series The Munsters. The Center will be a place of celebration actively involved in people's lives that people will want to go to.

5.2 Marketing Strategy

Because reputation is the key to success of a funeral home, the focus of the Center will be to quickly establish a reputation as the place for celebrating life when it ends in the way baby boomers want to be remembered.

This will be accomplished by hosting nonprofit activities that gather wide publicity. Stan Peters, the owner, will take a leading position in forming a local chapter of an organization like the Make-A-Wish Foundation, which makes dreams come true for children with terminal illnesses. The death of a child is the hardest thing for nearly anyone to take, including funeral directors. The recreation and meeting rooms of the Center will be available for the free use of nonprofit organizations that the owner is personally excited about. A public relations firm will be used to orchestrate the maximum exposure for the Center, its activities and the charities it promotes. This will bring the Center into the life of the community and give it a reputation for caring and for celebrating life.

The choice of location will support this focus. The Center will be sited within the metropolitan area where over two-thirds of the Lane County population lives. The ideal location would be the purchase of a church with a chapel and recreation room, with a stand of Ponderosa pine or Douglas fir in the front and back to bolster its Evergreen brand.

5.3 Sales Strategy

Sales will be accomplished through implementing the sales process and the employment of a full-time sales professional in year three. During the first two years, the sales process will be implemented by the owner who will document procedures and training manuals.

The job of the sales professional will be to:

  • Prospect and Qualify. The professional sales staff will be directly involved in networking the organization through a sales referral group, the Chamber of Commerce, and active participation in nonprofit causes that he or she is excited about. Pre-need business will be promoted though networking and through speech opportunities. Estate attorneys will be networked as well with a pamphlet we will present, How to Plan a Funeral that Celebrates Life. He or she will be a good listener, honing in on what the prospect really wants, including the price the prospect expects to pay.
  • Presentation. How to Plan a Funeral that Celebrates Life will be our outside medium for presentation. Inside, the salesperson will begin the presentation by featuring our chapel and reception areas. Showing how the reception area works will be the most important selling point for letting us help celebrate the life of the deceased. The salesperson will make it clear that the Center is not the least expensive funeral home, but the most unique. The Center will have a room for displaying the most interesting collection of caskets in Oregon. Everything from a pine box with denim liner to top-of-the-line, handcrafted, glossy custom caskets suitable for a state funeral. The salesperson will narrow the choices for the prospect down to three, based on what the prospect indicated he or she wants.
  • Proposal. The salesperson will write up a proposal according to the prospect's choice that's within his or her budget. The prospect will already be aware that the Center is not the price leader, and what the reasons are for paying more with us. 
  • Close. The salesperson will give a soft close, gently asking for the business by saying something like, "Why don't we just do this?" 

The sales professional will not be commissioned in order to avoid hard sells, but will be compensated with a base pay that would be considered moderate for salary plus commissions of a good salesperson in this market. In addition, he or she may receive profit sharing based on the overall growth of the business.

 

5.3.1 Sales Forecast

Sales forecasts are conservatively based on market share projections and the standard business growth curve.

There were 2,859 deaths in the Anytown MSA (closely equivalent to Lane County) in 2004. About 75 percent of deaths result in funerals nationwide. At the average 2003 price of $5,374, this means the funeral market in Lane County is worth  $11,523,200.

Since there are currently 14 funeral homes in Lane County, and there will be 15 when the Center opens, the average market share will be $768,213 in 2003 dollars. The average price of funerals at the Center will be a little higher. We project the average funeral at Evergreen Memorial Center will be $5,884, broken down as follows:

  • Professional Services  $1249
  • Staff  $140
  • Use of Reception Room  $495
  • Use of Chapel  $375
  • Dressing & Grooming  $115
  • Casket  $1590
  • Burial Vault  $250
  • Remembrance Products  $330
  • Transportation  $915
  • Total Avg. Funeral  $5884

The average market share measured in the number of funerals per year will be 143 funerals a year. Our total sales for the first year are projected at one-fifth of the average market share, or about 29 funerals at our average funeral price of $5,884. Businesses start slowly and, if they capture a niche, will then grow quickly. The sales projections are based on sales of one funeral for each of the first four months, followed by two funerals a month for two months. After that, one additional funeral is added each month for the first year. 

For the second year, sales grow to one-third market share with 48 funerals for the year. In year three, it becomes 3/5 of average market share at 86 funerals. In the fourth year, we acquire our full market share and our optimal level of sales with 143 funerals based on our current prices and death statistics. The 12 percent growth shown in FY 2010 merely shows revenues on optimal sales of 143 funerals catching up with inflation from the previous four-year period, assumed at three percent per year.

The Cost of Goods Sold percentage of 35 percent is based on industry averages according to trade literature.

Sales of Immediate Cremations are projected according to market share of Lane County deaths that do not result in funerals (25 percent) multiplied times our average price. Our average price of an immediate cremation is as follows:

  • Cremation  $1250
  • Remembrance Products  $370
  • Bronze Urn  $155
  • Total Cremation  $1775

In order to secure these goals, the Center will develop publicity that will draw Baby Boomers because of its leadership in nonprofit causes and its unique reception facilities, offering individualized celebration and social support. A public relations firm will be retained to promote the Center. The sales staff will network and become involved in the community to bring in business. Finally, the sales program will effectively capture the business these activities bring in.

 

Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Funeral Products & Services $170,665 $280,471 $504,847 $841,412 $942,381
Direct Cremations $12,425 $22,265 $40,078 $66,796 $74,812
Total Sales $183,090 $302,736 $544,925 $908,208 $1,017,193
Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5
Funeral Products & Services $59,733 $98,165 $176,696 $294,494 $329,833
Direct Cremations $4,349 $8,349 $14,027 $23,379 $26,184
Subtotal Direct Cost of Sales $64,082 $106,514 $190,724 $317,873 $356,018

5.4 Milestones

The following table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation. The most important programs are nonprofit activities to quickly establish our reputation as part of the community. These efforts were described in detail in previous sections.

Milestones
Milestone Start Date End Date Budget Manager Department
Make Offer on Church 2/1/2005 3/20/2005 $0 Stan Peters Owner
Acquire Funding 2/1/2005 3/1/2005 $0 Stan Peters Owner
Corporate Identity 3/1/2005 5/1/2005 $4,000 Marketing Contractor
Develop Website 3/1/2005 5/1/2005 $4,000 Marketing Contractor
Permits & Licenses 3/1/2005 4/1/2005 $1,000 Stan Peters Staff
Purchase Church 3/20/2005 4/1/2005 $0 Stan Peters Owner
Building Improvements 4/10/2005 6/1/2005 $19,000 Construction Contractor
Furnishings 4/10/2005 6/1/2005 $10,000 Interior Design Contractor
Network with Nonprofits 4/1/2005 6/30/2005 $200 Stan Peters Sales
Begin Local Nonprofit Chapter 5/1/2005 6/7/2005 $200 Stan Peters Owner
Setup Embalming Room 5/1/2005 6/1/2005 $200 Stan Peters Owner
Lease Hearse 5/1/2005 6/1/2005 $200 Stan Peters Staff
Setup Casket Showroom 5/1/2005 6/1/2005 $2,000 Stan Peters Sales
Audio-Visual System 5/1/2005 6/1/2005 $5,000 A-V Systems Contractor
Start Publicity Campaign 5/20/2005 6/30/2005 $2,000 Marketing Contractor
Begin Hosting Nonprofit Events 6/1/2005 6/3/2005 $500 Stan Peters Sales
Totals $48,300
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