Nicole Vullo
on
Q1 is Over, Now What?
Written by Jared Tanke
If you are like me, you are probably thinking how in the world are we already four months into the year? While relatively early still, it is always a good idea to take a minute to review what has gone well, what has not gone well, and figure out how to adjust with the remainder of the year. Just like SCI, Park Lawn, and Carriage do every quarter for their investors, every business owner no matter the size should have a quarterly report. Let’s dive into some of the key things to look at:
- Number of services – When looking at number of services in the quarter, we should not just fixate on the total, but really break it down into the number of traditional burials, traditional cremations, direct cremations, trade cases, donor calls, etc., so that we can better understand the trends of the families being served. We know that the US cremation rate in 2023 reached 60.5% and is expected to hit 63.7% by 2025 (NFDA 2023 Cremation and Burial Report), so we can all expect to see the total cremations rise. However, truly understanding the shifts in which services are being selected will be critical when setting future pricing and training the staff to be able to best assist with families.
- Staffing – This has been a hot button topic for a while now, and I continue to hear echoes of it from clients and others in the profession. At the same time, I have spoken to some clients who have not had much of an issue with hiring quality candidates. One common recurring theme surfaced from these owners – the idea of culture. What does it mean to have a great culture? I think the easiest way to describe it is having camaraderie, having a workplace that everyone looks forward to coming to each and every day to make a difference. While sometimes it feels like its best to just fill positions with the first person in the door, it can pay dividends to make sure this person will fit in with your current staff and help elevate that feeling of culture.
- Expense controls – This is where it is very helpful to have a current budget. At the end of the quarter you can make sure your costs were in line with what you had planned for, and if there are any significant variances, understanding why. If supplies are bought in bulk in the first quarter, it may exceed that first quarter budget, but will likely level out throughout the rest of the year. Making sure you have a good control of your costs can be extremely beneficial, especially when there are slow periods.
- Cash reserves – Based on your current cash balance today, how many days of overhead could you cover? Depending on how many services you perform, the right level may vary. A business performing under 150 calls a year may want to keep somewhere between 60-90 days of overhead in cash reserves. As the number of services scales up, there is a little more stability in the cash flow coming in, so you may drop down to wanting somewhere in the 45-day range. This also does not take into account setting aside any reserves for future capital expenditures. Having a running list of these items will be helpful when determining what the true level of cash is needed at all times.
This profession is in a state of change, between the rise in cremation, shifts in consumer behaviors, increased pricing transparency, among other pressures. Those that can adapt to stay on top of or even ahead of these trends will be the ones who succeed in the future. If you are in need of some help in reviewing your quarterly performance and would like to know how to better prepare for the future, give us a call at Foresight.