Many funeral homes are expected to update their facilities and add new cremation equipment this year. Funeral home walls, carpets and furniture receive wear and tear over the years, and a fresh, updated look can attract new families and business. Many owners are also looking to offer a new experience to their customers by increasing service options and adding new equipment. If you would like to increase your business by adding cremation services, there are important considerations to keep in mind.
1 – Plan for the Future
Across the US, cremation is becoming increasingly more popular. As a funeral home owner, you have the option to outsource the cremation or have the full service in-house. When weighing the financial impact to your business, consider the loan payment for equipment and construction or lease payment, any additional staffing and inventory needs versus the revenue generated from the services. Compare that figure to the revenue generated when outsourcing the cremation and run financial projections to see what will benefit your business long-term.
If you decide adding a crematory is your best option, begin to prepare for financing, any construction needs and how to will communicate new services to your community.
2 – Should I Lease or Purchase the Cremation Equipment?
When your funeral home needs new cremation equipment, you have the option to purchase or lease. Depending on your financial needs, both options come with advantages.
Leasing a crematory offers the advantage of no required down payment. You are also not bound by any personal guarantees, collateral or lien requirements. It may also be easier to qualify for a lease than a loan. However, lease payments may hinder your cash flow, so it is important to consider financing the purchase.
A business loan to purchase a crematory typically has a longer loan term, meaning you have lower monthly payments and more time to pay off the debt. You also have the flexibility to add working capital if you need to increase staffing or make facility updates.
When considering a loan, think about your market’s preferences. Should you add a viewing area? Do you need space to display rental caskets? Working with a lender who understands the industry and can include the crematory purchase and other financing needs into one loan may be your best option.
3- Do Your Homework on Zoning in Your Area
As the use of cremation gains popularity, more and more communities are increasingly concerned about emissions from crematories. This has created resistance in various communities across the country.
Zoning ordinances are typically designed and enforced under the different local jurisdictions. Be sure to check your local ordinances before you are too far along in the process. If you have multiple locations, decide if each location needs a crematory or if one location can service them all.
Also take note of any building or structural changes your funeral home may need to add the crematory—some jurisdictions will require approval for seemingly small changes.
4 – Improve Your Cash Flow by Refinancing
As an investor in your business, you want to look for ways to financially improve your business. How can you serve your customers better while also boosting profits? Are there new ways to generate additional revenue?
One way to improve cash flow without making drastic changes is to refinance existing debt.
Seek a loan with a 20-25 year term, no balloon payments and competitive interest rates. By comparing your current monthly payment to what your new monthly payment could be, you can see if refinancing will free up cash for your business. These monthly savings provide an opportunity to make improvements to your funeral home, to increase marketing efforts or expand your business.
If you are considering adding a crematory to your funeral home in the next few years, refinancing debt now will allow you to save and put money towards the purchase.
5 – Create a Sales Strategy for Your New Cremation Services
As you plan to add a crematory and new services, create a marketing and sales strategy to make the most of your investment. Research the local competing funeral homes to find how yours can stand out. Study their marketing strategies, branding, equipment and types of services offered. Also pay attention to the needs and requests of families you serve for new offering ideas.
In addition to bringing awareness to your new services, it is vital that your sales team can explain the value of both traditional burial and cremation, as well as the services surrounding them. Does your staff offer a service with a rental casket as addition to a cremation? Are receptions and celebration services fully explained? Utilize industry research and sales strategies to ensure your staff is meeting the needs of families.
Advertise any unique extra services you have introduced. Put in place a solid social media marketing strategy. You can create a Facebook business page that regularly provides educational posts. Traditional marketing channels including radio, TV and newspaper ads can help you reach a demographic who may not be as active on the Internet.
As a funeral home owner, you must invest in your business and future success. The increase in cremation has required many funeral home owners to adjust their business strategies. By creating more options and providing a better experience for families, you can grow your business. Favorable financing terms to purchase equipment, expand, refinance and renovate can help you reach your business goals. If you have questions on where to begin, or how financing can help you get started, contact Tim Bridgers, Senior Loan Officer at Live Oak Bank at firstname.lastname@example.org.