Any small business runs the risk of going under. Even funeral homes that have been open for generations aren’t immune.

But there’s no need to worry. After all, the best defense is a good offense. The more you understand why funeral homes close, the better you’ll be at avoiding it.

So let’s dig into the big reasons we’re seeing funeral homes close and what can be done to avoid it.

Not Keeping Up with Competition

Failure to compete with funeral homes in your area is a slow killer for business. It’s clear that families want new experiences. Funeral traditions are changing fast.

The past 15 years of funeral service alone have seen more change than the past 50 years. Cremation is hotter than ever, and it now beats traditional burials. And it seems each day there’s an alternative to the traditional funeral popping up.

In order to stay open, a funeral home needs to stay competitive. Even if your funeral home hasn’t seen any direct competition for years, there’s always the chance a competitor can open up suddenly in your community.

It’s best to stay prepared. And the key to staying competitive is to offer something that no one else has. Differentiate yourself in the market by offering unique memorial gifts, renowned personal services, or even something as simple as modern payment options.

This differentiation is called your unique selling proposition. To read more about how to develop yours, check out this article.

Not Enough Visibility

It’s hard to get anyone’s business if they don’t know you exist. Funeral homes need to actively increase their visibility in the community.

Many funeral homes have the traditional methods covered — they advertise in the newspaper, put up another ad on a billboard, and maybe even spring for a TV commercial. But traditional advertising methods aren’t as reliable as before. They’re trusted less than they were in the past.

A survey by Search Engine Land revealed that 85% of people prefer to use the internet when looking for local businesses. This means increasing your funeral home’s visibility online is just as — if not more — important as traditional advertising.

Here are some quick tips for increasing visibility online.

• Sign up for Google my Business to instantly make yourself more noticeable in Google search results.
• Start a funeral home blog to increase traffic to your website.
• Actively engage your community on social media.

You can also think outside the box and host local events that are great for public relations and word-of-mouth marketing. Click here to learn more.

Not Following Population Changes

Communities change, and it’s bad business to think that a town will look the same as it did 50 years ago. Changes in a town’s population directly affect a funeral home.

Robert Pierce, the president of Pierce CFO — a company that deals with investing and selling funeral homes — told the Pittsburgh Post-Gazette that one of the biggest reasons he sees funeral homes close is because of shifts in population and demographic trends.

The shift in a population can be sudden, like how the Pittsburgh Post-Gazette article described how in the 80s a new interstate displaced a chunk of the population and caused 17 funeral homes to eventually shut down or move.

Shifts in the population also can be slow and gradual. Rural areas are facing an exodus as more people make their ways to urban cities. The trend is known as “rural flight,” and the trend is expected to continue to get worse in certain areas such as the Midwest.

Keeping an eye on changing population trends and demographics is crucial to the long-term future of a funeral home. Click here for an in-depth look at key demographic areas for your funeral home to focus on.

Not Having a Plan

Has your funeral home thought about the future? For many funeral homes, poor succession planning does them in. According to the Family Firm Institute, only 30% of family-owned businesses survive a transition into the second generation. Only 12% make it to the third. And a lucky 3% will survive to the fourth generation.

The two best methods for surviving a transition include developing a sound succession plan early and finding ways to innovate the ideas of previous generations. If you want to learn more, we’ve got a free eBook on the topic of family business and succession.