I came across this recent article from Yahoo Finance titled “Climate change is ending the Sun Belt boom” and it reminded me how demographics can and will affect the operations of your funeral home.  The short article was very interesting and contends, with the use of decade maps over the past 50 years how migration and residency to the nation’s Sun Belt is changing. . . for what the author of that article believes may be climate change related.

 

In short, the article postulates that the movement to the South in the American landscape has started to change because of the “extreme heat days” prevalent so often in today’s South.  The article further contends that many people are migrating from the South to areas of less “extreme heat” due to the, depending on how you believe, climate change or perceived climate change.

 

In doing the research for this article I also found a trend that has been reversing since the pandemic. . . .that trend is that no longer are people leaving rural areas in droves, but many selected rural counties are seeing an upsurge in net incoming migration  i.e people are now moving to rural counties.

 

According to the article, much of that growth has came in “. . .  481 growing (rural) counties by 2 percent or more during 2020–22. These counties are typically found on the periphery of large urban areas and in recreation and retirement destinations, such as the northern Great Lakes, the southern Appalachians and Ozarks, and the Rocky Mountains. Based on previous research, this increase in “amenity migration” (people choosing locations to live based on quality-of-life factors) is not surprising given that baby boomer retirement is reaching its peak and remote work is allowing more locational freedom for working-age adults”.

 

The 481 counties out of our nation’s 1,976 is about 25% of our counties with this growth.  And, while that is great, that growth in rural counties is not happening everywhere as 829 counties (about 42% of the nation) are seeing losses of population of more than 1%.  Here’s what the article says about those counties:  “These included many high-poverty counties in the South, some farming counties in the Midwest, and several isolated and sparsely settled counties in the West. The majority of counties with net domestic out-migration were in the Great Plains, including some regions dependent on oil and gas extraction, which experienced COVID-19-related downturns in production. These regions include the Williston Basin in western North Dakota and eastern Montana, the Oklahoma Panhandle, southeastern New Mexico, and west Texas”. 

 

Funeral Director Daily take:  Why this matters — As a funeral home owner you might find this information boring and wonder “Why and where does this data fit into my business strategy thought process?  Quite frankly, it is fairly simple. . . . the more people that live in your community the more deaths there will be — it’s just the law of numbers.

 

And, while those death care numbers will more than likely come in slow incremental phases over the growth spurt of your service area, the knowledge of what is happening in your community can be beneficial to the sale value of your business.  The community that I live in is Alexandria, Minnesota, the county seat of Douglas County.  It is located in Minnesota’s lake country on the interstate highway system almost exactly between Minneapolis to the east and Fargo, North Dakota, to the west.

 

When I grew up and graduated from high school in the 1970’s the city had a population of about 6,000 and the county a population of about 22,000. . . .both numbers have virtually doubled by now and are increasing at a faster scale as people from smaller farm communities move here to retire and retirees and working people from Minneapolis and Fargo move here both for the lakes they can live on and for a less stressful life than in those larger cities.

 

When I first worked with Tom Johnson of Johnson Consulting Group about selling my funeral home offers came in but in my opinion they were less than I felt the funeral home was worth.  Quite frankly, the numbers were based on “only the past financial history” of the funeral business with buyers looking at the possible “negative” aspects of the future — such as a possible loss of market share, competitors moving in, and an increase in lower cost cremation services.  There seemed to be no “positive” aspects that these buyers looked at.

 

I came to the conclusion that I would not sell my funeral home for those prices offered.  I knew my community had great future assets to offer to businesses that wanted to locate here, including funeral homes, as for several years Alexandria was named the top growing micropolitan city in the state and also one of the top in the nation.

 

What I did at that time is work with the State of Minnesota’s demographer’s office on their projections for the state of Minnesota, specifically, their future projections for the population of and tax receipts of my county.  The state’s tax receipts projections indicate, in part, the projected growth of the area.  To make a long story short, I put together a financial projection of our funeral home based on the tax receipt and population projections of the State of Minnesota for our area over the next two decades.

 

What that projection showed was that even if a purchaser of our funeral home lost 20% of our present business over the next ten years they would still have positive case volume growth because of the anticipated growth of our community, especially with the retirement aged amenity-based migration moving in.

 

With that projection added to the funeral home’s past financial history, and with Johnson Consulting Group’s help, we were able to turn potential buyers worries about market share loss into positive projections about the future and raise the purchase price about 25% from previously offered numbers.  The demographic projections on potential case numbers also was able to get national publicly-held companies into the discussion for what looked, on the cover, as just another “small-town” funeral home for sale.

 

So, make sure you know your community demographics and projections. . . . because it can make a difference.

 

More news from the world of Death Care:

• RansomHub says 100GB stolen from Florida Department of Health.  CyberDaily (Australia)
• A Firm Foundation.  The University of West Alabama
• Jellico funeral home “likely not salvageable” after catching fire, owner says.  Video story and print article.  WYMT CBS-TV (KY)

 

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