In the death care industry, profit margins can be slim due to the rising costs of running a funeral home. Fortunately, you can protect and even improve your profits by converting your fixed costs to variable costs.
Fixed costs are your unchanging funeral home expenses. Examples include your employee salaries, taxes, office supplies, and so on. Variable costs are expenses that rise and fall according to how much customer patronage you receive. Understanding the difference between the two can make or break your funeral home business.
Large fixed expenses are always costly in the long run because you must pay for them regardless of how much your business earns. By converting those expenses to variable costs, you have better control over your finances by paying only for the resources you use.
Some of the ways to turn your fixed expenses into variable expenses are:
1. Renting vs. Buying Vehicles
Buying a hearse or any other vehicle for your business means being responsible for that vehicle’s maintenance and more. During periods when business is slow, you still must pay for the vehicle’s care even though it is not earning you any money. Become more cost-efficient by only renting vehicles on an as-needed basis.
Having full-time employees is a huge expense, especially since you must not only pay salaries but also finance healthcare insurance, 401(k) plans, and more. Moreover, you must pay your employees in full even when they are not working at capacity. From a business point of view, this is wasteful. Improve things by hiring part-time staff for office management and other duties.
3. Reduce Overhead
Overhead costs, such as your facility’s mortgage and business insurance, all contribute to the high cost of running your business. Try to reduce these costs by switching to more affordable suppliers and providers that you can rely on for quality at lower prices. You might also consider switching to more energy-efficient fixtures on site.
Talk to MKS&H: Your Expert Financial Advisors
Reducing your expenses is just one way to improve the finances of your death care business. You can also boost your profitability by providing customers with tailored services that satisfy their needs without exceeding their budget.