We came across an article recently that introduced new owners at the Hackett-Livingston Funeral Home in Shenandoah, Iowa. The article is interesting to us as it brings up the idea of funeral home brand growth in rural areas.
Most people in the death care space will talk about “demographics” as much as they talk about EBITDA and market share today when valuing funeral home properties. We’ve even done articles on the subject of demographics such as this one from last December where we point out where the growing markets in the United States are expected to be.
And, in many instances, we have published press releases on the major acquisition companies buying into greater and greater market share in some of these highly desirable growing markets.
However, this article tells of the Riekens, who own the Rieken Vieth Funeral Home in Oakland, Iowa, and the Rieken Duhn Funeral Home in Griswold, Iowa, and introduces us to their new third funeral home with the purchase in Shenandoah. The article reminds us that you can build a growing and prosperous funeral home business by clustering funeral home ownership around a central location in rural areas also.
As a matter of fact, if you can find the right demographics in small communities you probably have the ability to grow with less risk than those who are purchasing properties in major metropolitan markets. Consider these facts:
- If you are in communities of under 6,000 population you may very well be the only death care business in the community
- Property values for the physical plants in these size communities may be well less expensive than metropolitan markets
- In most small communities residents want their “home town” funeral home to take care of their family so there is virtually no direct price competition.
- In most rural areas cremation is a smaller percentage of human disposition than in metropolitan markets.
- Finally, consider that many rural funeral homes are in their 2nd or 3rd generation of ownership with the next generation not interested in the business. Couple that with the fact that more and more young people are growing up in the metropolitan areas and you may find little competition in a quest to buy a funeral business in these rural areas.
One major key, however, is knowing about the community. You need to know if the community is a growing community or a stagnant community losing population – like several farm communities of today. In major metropolitan areas census data is readily available. That is not always the case in rural communities.
However, if you can do the due diligence, like look at historical school enrollments and, especially when purchasing a funeral home, find out the status of the community hospital and nursing care center. In today’s day and age, nothing can clean out the older population of a community like not having the facilities for health care and senior living.
Our contention is that there are lots of places across America where a funeral director can build a pretty good size operation within a 35 mile radius by putting together five or six 60-80 call funeral homes over time. If building that type of business is something that interests you we believe that is still attainable in this day and age.
Here is the web-site for the Rieken Funeral Homes
Here is the web-site of the Hackett-Livingston Funeral Home