preneed sales

4 Ways Preneed Sales Create Cash Flow Stability

By Paul Lovelace, Executive Vice President & Chief Corporate Development Officer

As an experienced funeral professional, you understand that providing families with compassionate care and reliable service is at the heart of what you do.

However, running a successful funeral home also requires a strong financial foundation. One way to ensure stability for your business now and in the future is by investing in a strong preneed program today.

A strong preneed program does more than help families plan for the future. It can increase your funeral home’s value, encourage a steady stream of future revenue, reduce unnecessary financial risks, and more.

Here are 4 reasons why preneed sales are essential to your funeral home’s cash flow stability.

1. Preneed sales enhance your value

Families’ changing needs and increased competition have made it harder than ever for your funeral home to maintain profitability. While profits aren’t the sole reason you became a funeral professional, your business still needs reliable cash flow to serve future generations of families.

You can do that by showing families your value and how you can help them. A strong preneed program – supported by an effective marketing strategy – can help you stay top of mind with families and ensure your funeral home is the first one families think of when they need funeral services.

That way, no matter what their funeral preferences or needs are, they’ll know you’re ready to care for them.

Strong preneed and marketing programs can also help your funeral home reach families who don’t know about preplanning. Despite preplanning and pre-funding funerals being more popular than ever, many families are unaware of their options, giving you a great opportunity to show them why you’re the best choice for them.

Your preneed and marketing strategies can help you connect with families and educate your community on the importance of a good funeral service and the value of preplanning. Over time, this can help drive business through your doors and boost your bottom line.

2. Preneed sales support future revenue

The rapidly changing landscape of the funeral profession has made it challenging for many funeral homes to maintain – let alone grow – their at-need volume. If you’ve felt the pinch of decreasing market share, there’s good news: preneed sales can help your future growth.

On average, we’ve seen several funeral homes increase their gross margin by around $4,000 just from serving one extra family and funeral a year. So, if you performed 10 extra funerals a year, you could add (or preserve) close to $40,000 directly to your bottom line.

Over a decade, this could generate more than $400,000 for your funeral home, proving why preneed sales are crucial to the long-term success of your business.

Preneed sales can also immediately benefit your bottom line. The commission income from selling preneed policies can help balance your cash flow, cover ongoing expenses, and protect your business during the ups and downs of at-need services.

Whether you want to grow your revenue today or secure your market share for tomorrow, preneed sales are a win-win solution.

3. Preneed sales help reduce unnecessary debt

Unpaid at-need services can create significant financial strain on your funeral home. Families experiencing a sudden loss may not be prepared to cover the cost of a funeral, leaving you with unpaid balances and negative accounts receivable.

Over time, this can disrupt your cash flow and create unnecessary stress for your business. Preneed sales can help you avoid this common problem.

When a family prepays for their funeral service, the risk of your funeral home taking on bad debt is greatly reduced. You won’t have to worry about absorbing the cost of unpaid services, allowing you to rest easy and focus solely on helping the family.

Another benefit of prioritizing preneed sales is that they eliminate the need for you to ask for payment during a family’s time of grief. Removing this stress can improve the experience for you and the families you serve.

4. Preneed sales build customer loyalty

One of the most valuable benefits of a strong preneed program is building lasting relationships with your community. When families trust you to handle their preneed arrangements, they become familiar with you. They recognize your dedication and are more likely to return for at-need services.

These families may also recommend you to friends and relatives, further building your reputation and keeping you top of mind.

Preneed appointments also give you the chance to educate families about the value of a funeral – well before grief enters the picture. During these conversations, families have the time and clarity to make thoughtful decisions without the emotional weight of loss. This proactive education leads to better-served families and a greater appreciation for your services.

By fostering trust and building relationships, your preneed program can enhance your reputation and make you the go-to expert in your community.

Grow your preneed program with the right partner

A strong preneed program is more than a financial incentive; it’s a way to provide better service to the families in your community while ensuring the long-term stability of your funeral home. By enhancing your value, supporting future revenue, reducing bad debt, and building customer loyalty, your preneed program can create a solid financial foundation for your business today and tomorrow.

But before you can achieve the benefits of an active preneed program, you need a partner who can help guide your preneed efforts to new heights.

Funeral Directors Life has decades of experience, industry expertise, and innovative solutions that have helped many funeral homes develop an active preneed program. We’ll meet your specific needs by offering tools, training, and support to help you grow your business and serve families.

Together, we can build a future where your funeral home thrives and your community receives the compassionate care they deserve.

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