Nicole Vullo
on
Written by Jarod Bernat
As the first half of 2024 comes to a close, it is time to take a look back at how the year has unfolded so far. I’m sure everyone established a budget at the start of 2024, and I’m also sure everyone has set aside time to review how they’ve done versus their expectations through the first six months of the year. Could you read my sarcasm there? Okay, maybe it’s a bit presumptive to assume everyone took time to budget their year out, especially since we’re talking about a profession that’s infamous for being a 24/7 commitment. But it is vitally important to our evolution as business owners to set goals each year, and then afterwards, reflect on our performance against those goals. This means that we must intermittently self-evaluate to identify times in which we may need to make mid-year operational adjustments or adjust our expectations themselves.
When we set a budget at the beginning of a year, we’re simply making an educated guess about how the year is expected to pan out. This doesn’t mean we always know exactly what the year will bring, which was the case for many in the Covid & post-Covid years when case count and revenue were unpredictable. But this exercise still helps frame prior years’ performances in a way that allows us to identify trends in our numbers. This is how we identify and predict the “seasonality” of our business. Historical results validate what we refer to as our “slow” periods and “busy” periods. And if we incorporate these trends into our budgeting, we’re then able to identify preferred timing to either make large investments or bolster cash reserves.
By performing a mid-year review, we can also identify any areas of the business that haven’t aligned with the expectations set at the beginning of the year, so far. Maybe the roof needed a major repair and maintenance costs are now above target. Or maybe a funeral director quit unexpectedly, and you’re understaffed. Whatever the case may be, we need to identify the issues faced in the past 6 months and determine solutions to help get us back on track.
Taking the example above where a funeral director quit unexpectedly, we must determine how to effectively replace said director and leverage current staff more effectively while we weather the temporary absence. Start by prioritizing recruiting – if the need for a replacement is desperate and immediate, hire a headhunter to find suitable candidates. However, if the need for a replacement is less immediate, I’d recommend fostering relationships with local mortuary schools for a chance at hiring “raw” candidates whose skillset can be sculpted as you desire. In the meantime, you can also leverage your current employees by offering incentives for them to handle additional duties previously performed by the absent employee. Lastly, if you regularly suffer from high turnover rates, it might be helpful to evaluate how your compensation package compares to market averages. Employees who feel undervalued are more likely to quit, leaving you in a cycle of constantly hiring, onboarding, and training new employees. You will find that underpaying employees with high turnover rates costs significantly more than increasing compensation to retain talented employees in the long run.
Identifying the issues experienced within the year can be helpful so as to find solutions to them, but sometimes we may also just need to adjust our expectations given a new set of circumstances. Take for example a new low-cost competitor opened its doors down the street and are taking 5 calls per month from your business that used to do ~20 calls per month. It wouldn’t be reasonable to maintain our expectations of performing 240 calls this year – we would just be setting ourselves up for failure and disappointment. Instead, we would need to adjust expectations knowing that we’re only going to be performing ~15 calls per month going forward. This will have an impact on both revenue and expenses, changing profitability.
However, now that we’ve reassessed our budget with updated performance expectations, we can pinpoint opportunities to address over the remainder of the year. If the low-cost provider is stealing calls from your business, they’re likely not to be your higher quality calls – meaning your average revenue per call should be higher than originally anticipated at the beginning of the year. This creates an opportunity for you to highlight the superior quality of your services over other providers in your area (the new low-cost provider in particular) in advertisements and on your website. Therefore, most of the additional calls you’ll bring in over the rest of the year will likely be higher-quality service-oriented calls with a higher average sale. This way, the low-cost provider essentially ends up “stealing” your calls with the lowest profit margins and in turn, improves your profitability.
Not to mention, you’re expecting to perform 60 fewer calls on an annual basis, which means you should be able to cut down on some of your part-time labor as well. The example above shows us that numerous positive opportunities present themselves from a seemingly scary circumstance of “a new low-cost competitor entering the market”. This is why it’s important to dedicate time to assessing your circumstances so you can figure out how to optimally navigate the waters ahead.
Reflecting on our performance at the halfway point of the year is crucial to ensuring that we allow ourselves enough time to diagnose issues and find solutions before the year gets away from us. Every issue we experience presents an opportunity for improvement, and only by taking the time to reflect on our changing circumstances can we effectively respond. This all boils down to preparation and problem solving. The more frequently you monitor your performance against your expectations, the more effectively you will be able to react to issues or opportunities as they present themselves. So set a budget at the beginning of the year and evaluate your performance against expectations (at minimum) every 6 months. This simple practice is one of the easiest ways to give yourself the best chance of success as this profession evolves.