All businesses want to reduce overhead to maximize their profits and make sure that the business is as financially healthy and stable as possible. How can your funeral home lower your overhead costs and fixed costs to improve your revenue?
5 Tips to Lower Your Funeral Home Overhead Costs
- Look through your vendor agreements, particularly those that you have not re-negotiated in a few years. The average funeral home works with many different vendors, including those for urns and caskets. Depending on the volume that you purchase from each vendor, re-negotiating a single agreement could radically lower your fixed costs.
- Labor costs are another major expense for the average funeral home. As part of your daily operations, you should tightly control both overtime and part-time staff. Overtime does not just drain your bottom line, it can also prevent your employees from maintaining a good work-life balance and lead to increased burnout.
- If you have your own fleet, you should consider leasing or buying and selling your vehicles more often. When your funeral home’s fleet gets heavy usage, there are exponentially higher maintenance costs after 3-4 years. For some funeral homes, the best solution is buying and selling more often or leasing vehicles to give them the flexibility to get a new hearse or limo when needed.
- If you get general agency (GA) revenue through insurance companies, you should make sure that you are getting a fair deal. To take an additional step, your funeral home can require that preneed agreements be funded through insurance instead of trust.
- When you are ordering inventory from vendors, you should revisit your practices to make sure that you are ordering what you need for 30-45 days and not months or years. This can be challenging due to supply chain issues currently, but it’s a good idea to have an approval system in place when ordering inventory to avoid taking on too much of any given thing. When you have too many folders, prayer cards, candles, or urns on hand, that is all money that you could have used elsewhere.
Financial Planning for Every Death Care Services Industry Business from MKS&H
MKS&H provides tax and accounting services to businesses of every size and in every industry, including the death care industry. Our team can help your business gain confidence in your important accounting reports and make better, more educated financial decisions. Contact us today for a consultation.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.