1. Funeral Service Business or industry?

2. Funeral Service  Business or industry?  Whatever it is, we (funeral directors) are it!

3. Funeral Service As small business?

4. What about? Conglomerates or consolidators (a better term) Multi-unit operations Combos – combination operations

5. Combos  FH/cemetery combos = <20% in US (higher in Canada)  handle 30% of traditional funeral business

6. Small business (Quantitative description)  has less than 500 employees (100 – 500 – 1000 depends on the type of business)  Revenue < $7 million (range is $750,000 - $29 million)

7. Other characteristics?  independently owned and operated  not dominant in its field of operation (qualitative description)

8. Examples  Funeral homes/cemeteries $7 million  Supermarkets / Dep’t Stores $25 million  New car dealers $29 Million  Banks – based on assets

9. Service Corp. International 2008 10K report says:  12% market share in North America 1302 fh (12 in Germany) 369 cemeteries (208 are combos)  43 states, DC & PR NJ – 20 PA - 17  + 8 Canada & 12 Germany

10. Stewart Enterprises, Inc. 2008 10K report says:  218 FH in 24 states & PR  140 cemeteries  Operate premier facilities in terms of factors such as tradition, heritage, reputation, physical size, volume of business, available inventory, name recognition, aesthetics and/or potential for development or expansion

11. 2000 Census data says  there were 5.7 million firms with employees and 16.5 million without employees

12. More  only 1/3 of all family businesses are passed on to a 2nd generation  1/10 of those reach the 3rd generation ( = 3% of the original number)

13. Manager responsibilities  Market analysis  Operational analysis  Financial analysis

14. MARKET ANALYSIS  Demographics: Who makes up service area? Where do they work Economic base Religion Travel patterns  Death rate  Who do you serve?  Population trends/projections  Competition (competitive colleagues)  Social & business climate  Site selection

15. OPERATIONAL ANALYSIS  WHAT KIND OF WORK DO YOU DO? Complete funerals v. ???? Welfare/transfer cases/children/direct disposition Cremation / entombment /visitations, embalming Memorial services  % Merchandise casket / vault / urn  Use of facilities/graveside  Motor equipment use  Who performs what tasks ?

16.  Other services? video / pre-need / Celebrant livery / trade work insurance  Staffing / who performs what tasks ?

17. FINANCIAL ANALYSIS  Identify trends Sources of revenue v. expenses OVERHEAD Fixed v. variable costs How are bills paid? Are you solvent? Is loan necessary for expansion  Unnecessary expenses?

18. It’s more than PL Statement and Balance Sheet!  LIQUIDITY  ASSET MANAGEMENT  DEBT MANAGEMENT  PROFITABILITY

19. Liquidity  INDICATION OF FIRM’S ABILITY TO MEET SHORT-TERM OBLIGATIONS

20. ASSET MANAGEMENT aka OPERATING RATIOS  INVENTORY TURNOVER  AVERAGE COLLECTION PERIOD  AGING OF RECEIVABLES

21. DEBT MANAGEMENT  INDICATION(s) OF THE FINANCIAL RISK THE FIRM IS TAKING

22. PROFITABILITY  Return on Investment (ROI)  Return on assets (ROA)  EBITA (Earnings before Interest, Taxes and Amortization)

24. What consumers think  51% want to pre-plan their funeral, but have not done so yet  40% want a “casual” atmosphere at their funeral  12% think funeral directors are “exploitative” and “manipulative”  19% say FD’s “prey” on the bereaved  47% don’t care about memorial products