Funeral home owners are beginning to adapt to changes within and outside their industry, but many may not be moving fast enough to survive, according to a new survey by accounting and business-consulting firm Citrin Cooperman & Co.
Overall, funeral homes are growing at a modest pace, but many have seen profits plunge 50 percent from 20 years ago as death rates have decreased and cremations and alternative burials have become more popular, according to the report. Forty-four percent of the survey”™s respondents this year ranked the increase in cremations and alternative burials as the most damaging change in the funeral home industry, up from 28 percent in 2006.
A small-but-growing percent of funeral homes are taking steps to combat declining revenues. In this year”™s survey, 16 percent of funeral home owners said they had added or upgraded their cremation services and packages, up from 10 percent in 2006. Another 9 percent said they had added more options or innovations.
“It”™s nice to see those numbers increasing, but the other side of the coin is that more than 75 percent of the funeral homes are not taking significant measures to ensure their long-term success,” said Ed Horton, partner-in-charge of the funeral industry services practice at Citrin Cooperman. “Many funeral home owners have a service mentality first and a business mentality second. Customer service is paramount in their business, but they can”™t pay short shrift to sound management and fiscal practices if these funeral homes want to continue to be a vital part of their communities.”
Horton said that with more and more people choosing cremations, funeral directors have to make sure they have multiple cremation packages to offer families. In New York, 25.2 percent of all burials are cremations; in Connecticut that figure is 36.8 percent. In many other parts of the country, it is more than 50 percent and even 60 percent.
“Cremation used to be a dirty word in the funeral industry; it used to be low-end no frills, and no profit margin,” he said. “That”™s changing. A lot of cremation work is like a full-scale funeral service. Funeral directors are realizing greater revenues than previously because of adding these new services.”
Horton also said “green burials,” where a person is buried in a parklike setting with no headstone and no casket, are also becoming popular, though not so much here as in other parts of the country, such as the Pacific Northwest.
According to the survey, 67 percent of funeral homes that responded said they have an Internet presence, up from 55 percent a year ago. Still, that number is alarming, said Horton.
“In most other business, that number is more like 99 percent (with a Web presence),” he said, noting the funeral industry is a traditional one that often is slow to accept change.
“It”™s an industry that has moved slower, especially in this part of the country,” said Horton. “In this industry, it”™s a fairly dramatic change (to create a Web site). So much of it is tradition-based.”
Becky Lautenslager, funeral director for Shaughnessy Banks Funeral Home in Fairfield, agreed that funeral homes have to keep up with changing times to remain viable.
“Without a doubt we better adapt, and go with the flow of where the business is,” she said.
Shaughnessy Banks has a Web site, and it also offers additional products to keep up with the times, such as memorial DVDs.
She said with cremations on the rise, funeral directors have to embrace that choice.
“You can still have traditional funeral service with cremations, and we encourage that,” she said.
Citrin Cooperman”™s survey polled more than 200 funeral home directors from New York, New Jersey, Connecticut and Pennsylvania.
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