Nicole Vullo
on
The new year may seem like it is far away, but there are just a mere 10 weeks left. While owners and operators have to keep their eye on the ball in order to maintain a strong finish to the year, simultaneously they must also keep the future in focus. This means, budgeting for 2024. We asked Senior M&A Analyst, Jared Tanke to further elaborate on this process.
Question: I am in the process of starting my 2024 business plan for my funeral home. What is the first step that I need to take to create a successful plan?
Jared Tanke: Budgeting for a funeral home is absolutely critical to maintaining quality service, having adequate reserves for upgrading facilities, and navigating the constant changing landscape of the profession. Having a well thought out planning session where you lay everything on the table, review what has worked and what hasn’t worked over the last few years will be some of the best time ever spent. As the famous Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe”.
Plan to set up a budget for 2024:
Business Review: Dedicate time for some business introspection. This doesn’t always come easy, so to get this review going, it may be easiest to start by completing a simple SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). Some questions to reflect on while completing the SWOT exercise: what has gone well in recent years, what have been challenges, and what are the needs of your organization.
Market Review: One of the most valuable insights an owner can have is knowing what is going on around them. This includes knowing what is going on with the other competitors in the area, but also (and possibly more importantly) knowing what is going on with the families that you are serving. If you know that your markets demographic has been shifting over the last few years and will continue to shift, there may be new preferences of those families as it pertains to funerals. By adapting quickly and being on the leading side of these changes, you will leave the businesses around you struggling to keep up when the time is too late.
Expense Review: The biggest expense each business will have is salaries and benefits. Are you expecting and/or needing to hire anyone new this coming year? Will you be offering any raises or changes to benefits? While the latest annual inflation rate of 3.7% for the 12 months ended September ( according to U.S Labor Department data published on Oct. 12, 2023) has gone down from the highs experienced in 2021 and 2022, it is still the highest it has been in over 10 years. There may still continue to be a rise in costs for supplies/utilities/administrative work.
Facility Review: When was the last time your facilities have had an upgrade? Is there any deferred maintenance that needs to be taken care of? Having a detailed list of what potential upgrades may be needed in the upcoming years, with an estimated cost of each, is very helpful so you can manage cash reserves of the business and set aside the funds for projects.
Other items to consider: There are many other items that also need to be factored in and considered.
Technology – Are you currently using and satisfied with your case management software? When was the last time you had your website reviewed, is it compliant? Are your prices listed on your website anywhere?
Staff training – Continued education, licensing, management courses, may be expenses paid now that set the business up for better success in the future with a more cohesive staff group that knows their employer cares about their development.
Marketing – Goes back to what is working and what is not. If you use a 3rd party marketer, review what they have planned for the upcoming year to make sure it aligns with your goals. If you are active in the community, making sure you identify which events you plan on attending.
Contingency – There are always unforeseen challenges that you need to have a rainy day fund for. Hopefully they don’t get used, but being prepared is key.
Expansion – May not be on the top of your list, but over the next several years there will be many funeral homes changing hands, and if you have a desire to grow through acquisition, this is the time to start thinking about it and building a plan to reach out and have finances ready.
Some of the best time well spent in the next few weeks may be time spent in a conference room or office and putting together 2024’s budget. It may not seem like the best allocation of your time, but it will set the tone for the future of your business. Whether this is the first time you plan on creating a budget, or the 20th time, it is critical. At Foresight we would be more than happy to assist in the creation, implementation, and accountability of the budget.
Do you have a question for us? Email info@theforesightcompanies.com today for a chance to have your question spotlighted in our next blog!