At this point, funeral home owners and cemetery operators should have their 2023 strategic business plan near completion. One of the important elements in your plan is your targets and expectations for the coming year. We understand that this can be complicated due to the lingering impact that the pandemic has had on our businesses. We asked Senior M&A Analyst, Jarod Bernat to further elaborate on whether these areas need major adjustments.
Question: How do I adjust my targets and expectations coming out of the pandemic?
Jarod Bernat: This question has many different variables affecting how one may have seen the pandemic affect their business, and how they can expect the business to change again coming out of the pandemic. What we have seen with our clients at Foresight is that due to gathering restrictions during the height of the pandemic in 2020, Average Revenue per Call decreased. This was a result of families choosing not to select funeral services or as significant of services, which also led to decreased merchandise sales. As restrictions were removed in 2021 and further in 2022, we have seen these Averages return to and often exceed pre-covid levels. Driven by increased death rates caused by the pandemic, we saw a spike in case counts in 2020 and 2021, which have started to regress in 2022. However, early adopters in providing technology offerings as part of their services during the pandemic have not experienced as significant of a decrease in case count in 2022, if any at all, as their improved service offerings allowed them to capture market share from competitors who were slow to adapt.
Something we saw affect all businesses across the board on a national scale was the increase in merchandise costs. As logistical nightmares due to shortages of material supply and employees forced vendors to implement “temporary surcharges” on their merchandise and deliveries during the pandemic, business owners had to decide whether to increase their merchandise prices accordingly. Now, as logistics have improved, vendors have not removed these prices increases, and have instead opted to keep merchandise prices close to their peak. Lastly, as the pandemic changed the way businesses across all industries are staffed, our industry was not immune. We have seen employee shortages force business owners to increase pay rates, which is necessary in an industry where locking down good talent will dictate the long-term success of the business.
As the chaos of the past few years has brought many constantly changing variables, some operators have instead opted to sell their business rather than worrying about adapting and evolving as the world comes out of the pandemic. And with the market in a ferocious feeding frenzy, businesses are being sold at some of the highest values seen in decades. But whether you decide to transition the business to the next generation or face the future head-on, Foresight will always be here to help ensure you are prepared and in the best position possible going forward.
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