Dan Isard
on
Do you understand why your business has a profit? It is simple math. Revenue, minus Cost of Goods Sold, minus Operating Expenses equals Profit. If profit is as simple as a 3 entry math equation, then why have profits declined 60% or more during the past 30 years of the funeral profession? The simple reason is: profit is simple math but analyzing how to maximize profit is complex. OGR has enlisted Dan Isard’s The Foresight Companies to help its members with The Strategic Business Analysis (“SBA”) that requires heavy analysis.
The average profit margin of a funeral home is less than 7%. The average Foresight client profit is anywhere from 28% to 32%. The reason is our deductive intelligent tools that help clients understand their operating metrics, set prices and manage their operations to a revenue and profit goal. Now, as an OGR member, you will have a chance to get SBA service at a dramatically reduced cost.
The Foresight team has been performing SBA for hundreds of funeral homes over every part of North America for more than 20 years. We have perfected this analysis. It clearly highlights the way a funeral home works, when it is not working, and why. Understanding the why is critical to understanding whether this is a temporary matter, an outlier period or if it is a matter that requires attention and immediate change. If the latter, the SBA will clearly demonstrate what changes to make.
The SBA focuses on hundreds of data points, but allow us to give just one of the logic trails that SBA can highlight. Imagine you are a funeral home owner and expected to have $300,000 of revenue in a quarter. Assume that your business generates only $250,000 of revenue in that quarter.
The SBA will address the following questions:
- —Is there a problem with case count or is it revenue/call?
- —If it is revenue/call, is it casketed or non-casketed calls, or both that are having a problem?
- —If it is casketed calls, is the revenue problem a service fee issue, merchandising issue or a universal issue?
- —If it is casket, vault or other merchandise that is the problem, is it the mix or is it the mark-up?
- —If it is casketed calls, is the revenue problem from at-need or preneed?
The SBA does that for every dynamic of operations. The SBA is not artificial intelligence. The SBA still takes the analysis of a business from Foresight who will present their findings to the member. Depending upon the type of SBA level you sign up for, the reports will be transmitted and reviewed with you in different formats.
When you use the SBA you will start to see your business in a different light. You will understand the “ying and yang” of how matters are related. Profit is an elastic number, which means if revenue stays the same but overhead goes up, profit (being elastic) is the only thing that will change. So the SBA will help you see and understand the relationships with Revenue, Case Count, Merchandising, Overhead points and Profit. Profit then yields a result upon Value. In one of the SBA offerings, your business and real estate value is updated annually. Foresight’s SBA will help OGR’s members to have the most profit they are comfortable having. By tracking the various key indicators of our SBA using OGR members, over few years, we can demonstrate increased profit and value. Funeral home owners and managers take the weight of the world off a grieving family’s shoulders and help deal with at-need and preplanning needs. However, most funeral home leaders are not well prepared to deal with financial needs. Your simple solution is to sign up for SBA, today.
