Death: Your Days are Numbered
In the next decade — ironic as it may seem— death will meet it’s maker.
More specifically, the death industry — the $21b a year operation that deals with end-of-life services including grave plots, headstones, funerals, and body “disposal” — will enter into a cash flow death spiral.
Take a good look at the chart below. Spend a moment with it.
If you are in the death industry: Do. Not. Glaze. Over. It.
It is your future.
Before you read anything else: Breathe.
In. Out. In. Out. (drink some water and, please, have a seat if you’re feeling a little lightheaded).
Let’s talk positives. The black line — a rise in US deaths due to the aging of the baby boomer population—has been long hailed as a forthcoming golden age for the funeral industry.
Death rates will rise. That is true. As a funeral director or service provider, it’s hard to not get excited by that (from a business perspective, not a personal one).
But here’s the rub: The purple line.
Oh the purple line. For shame.
The purple line is funeral industry revenue. YOUR money. And that money is dissipating.
Here’s how the purple line is calculated:
- The total projected death rate (.82% in 2015 to %.93% in 2035; or 2.7M in 2015 to ~3.4M in 2035) x
- The projected burial vs. cremation rate (~50% cremation in 2015 to over 70% by 2035) and the average spend for each (which will remain constant save for inflation) x
- The inflation rate (estimated 2% every year, standard economic assumption).
The net: $21b in 2015 to just under $16b by 2035. Nearly a 25% decline. Despite the fact that US deaths are on a constant rise, the revenue projection for funeral homes continues an accelerated decline.
So now we get back to that cash flow death spiral. I nearly entered one once. Back in 2009, my previous company BzzAgent was under pressure: the global bank loan scandal magnified by a change in the demands of our customers due to social media. I thought we were safe, as we had $5M in the bank and would be able to weather the storm. “Not so,” said a Board Member, Tom Beecher, who also happened to be a very savvy CFO. He told me that what we had was a classic financial illusion — it looked like we had enough cash, but once we started losing more revenue, we would buckle under the weight of our costs until…well…it wouldn’t be pretty.
If the numbers are right, no one will be spared.
Funeral Homes will be forced to sell (which they’re already doing), or will just close up shop. The impact of that will ripple to the consolidators and rollups like SCI and Carriage, then service providers like Funeral One (hey, Joe Joachim, note you are the only CEO with a medium account on this list), CFS, Legacy, Batesville, Matthews, Dodge Chemical and Messenger — all will feel the massive pain of an industry in disarray.
Like my CFO-Board Member told me, waiting this out is not an option. At BzzAgent, I acted with haste, cut 40% of my headcount and we survived. The stakes in this case are far, far higher than one company’s survival. This is about an entire industry. Action needs to be taken now.
One often-highlighted potential solution — Green Burials — won’t be of much help. I love this concept, but they will not increase spend. And transforming funeral services to “celebration services” won’t solve the problem either — the price of a funeral won’t go much higher than inflation’s cap. So the purple line remains unsolved.
That said, two concepts that can help the industry:
- Pets. Yes, pets. Pets who die. This is a $100M industry and growing (some amazing funeral homes are already doing this). This will add more supply and another revenue stream with less cost — and increase the number of times a family will use your services.
- Aftercare. The opportunity here is enormous, and it’s not about grief counsellors or hospice help. It’s because social has forever changed how everyday people grieve and mourn. The funeral is just one stop in a lifelong process. Families need better ways to share and reflect and remember — and continue the bond with a deceased loved one — and they have few private, safe resources to turn to (full disclosure: Mylestoned is building here because it’s such a massive opportunity. Sign up for our beta :)).
There are people trying to push on changes. People like Caitlin Doughty from Order of the Good Death, Vanessa Callison-Burch from Facebook, and a few forward-thinking funeral directors — but there are far far too few.
So the choice is yours. Do you continue to watch the numbers decrease and hope reality doesn’t come calling? Or do you take the leap, make a transformative change, and save this industry from death by it’s own hands?
[If you’re a funeral director, be one of the first 15 to change the industry here]
