President Trump and his Department of Government Efficiency (DOGE) leader Elon Musk are rapidly looking at costs that are currently in the government budget that may be able to be whittled out.  It may not be perfect and it may not even be proper — as is discussed in this Yahoo Finance article about the government financial procedure of “Empoundment” — but it may eventually create a bigger “margin” between tax revenues and government expenses.

So, I believe, regardless of how you feel about the Trump/Musk team taking a chainsaw to the federal budget, there may be something to learn from their desire to do so.

I’m of the opinion that if original budgeted expenses are not annually watched and acknowledged they become expenses that grow in cost and, over time, may not be needed.  Take, for instance, a funeral home budget for advertising and marketing.  Maybe that budget has $12,000 appropriated for ad space on highway billboards.  Instead of simply adding a number such as 3% inflation to that $12,000 for the next year making the expense $12,360, one should look at the line item of $12,000 and determine if that number is still appropriate and is actually doing for the funeral business what was expected of that $12,000 expenditure.

Some items, like advertising spending, can be tough to quantify, but they should be looked at and discussed with potential options in mind. . . . Maybe social media, or radio or cable tv would bring better results. . . . and at the same time be less costly.

Tom Anderson
Funeral Director Daily

My main point about the Trump/Musk “efficiency” project should be an annual project at your business.  However you widen the gap between revenue recieved and expenses paid increases your bottom financial line.  The two ways to do that are “enhancing revenues” and “containing costs” and forever fine-tuning those items will lead to a stream-lined financial business that will create increased value over time.

Going over your revenue and expense line items annually and putting some thought into each line is somewhat time-consuming and can be challenging as you may have to have the courage to change some expense items.  However, the failure not to do annual zero-based budgeting will lead to, more than likely, receiving less than the optimum income you should be able to bring in and create a bloated, inefficient expense budget.

Again, in my opinion, bloated, ineffecient budgets of some traditional funeral homes will eventually invite competitors who can come to market with less expensive options and still have a sufficient margin.  That is why in this day of growing choice of Death Care disposition services it is more and more important to keep watching your costs.

Empoundment —  This article from Yahoo Finance questions the President’s authorization on the issue of “Empoundment”.  What is meant by that is, “Does the President have the legal authority to not pay, or remove from the budget, items that have been authorized by Congress to be paid and signed by a former President (in this case President Biden).”

The challenge argument to Empoundment is that not paying these authorized amounts seemingly removes the separation of powers from the United States government.  i.e. It seems to put “spending” on the President’s table rather than Congress’.  The article states that this issue is on the path to be settled at the Supreme Court.

A Business created with “Enhanced Revenues and Cost-Containment” — One of the businesses that I have been associated with and founded during my business life was the International Basketball Association.  While there is a much longer story to my involvement let me say that the impetus for starting this business was to be able to bring minor league sports, in this case basketball, to smaller communities.

In the business conceptual planning the only way possible to do that was to find a way to bring costs down to the point where smaller communities, with less available ticket payers and advertisers, had the income available to build a profitable margin.  That was my challenge.

Over time I was able to create profitable margins by taking existing minor league basketball budgets and looking at ways to enhance revenue and contain costs which would allow profits in smaller communities with less opportunities for ticket sales and advertising revenue.  We enhanced revenues wherever we could by not only selling admission tickets and advertising but by creating fan clubs, youth clubs, royalties on concessions, etc.  The cost-containment side was even more scrutinized with the biggest savings developed by transporting players via charter buses rather than airline travel and partnering with arenas on rent dependent on the size of the crowds we drew for each game.

Because of the charter bus travel geographic locations of teams had to be in close proximity.  We operated very well for about five or so years with profitable clubs. . . which actually led to headaches as we grew.  The distances between teams grew and some of the cost-containment features were lost as we became a league that stretched from Saskatoon, Alberta, to Youngstown, Ohio.

We eventually discovered that we should have became a confederation of smaller regional leagues rather than stretch our distances creating a national-like league in scope.

Again, it points out the importance of knowing who you are and how you bring in your financial margins.

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Within the last week I received my health insurance plan 2025 rates and I also paid the property and casualty insurance on my lake cabin.  The health insurance premium was up 7.4% and my P&C cabin insurance also took a hike.  I also was at a funeral home seminar where I heard a commercial insurance agent tell all of us in attendance to expect commercial rate increases on our funeral homes in 2025.

It’s also no secret that property insurers are having more than ordinary claims due to weather incidents in Florida and other Southern and Southeastern states.

And, just to put some icing on the “rising costs” cake I noticed this recent article from CFO titled “Budgets for base salaries expected to soar again in 2025″.

So, even though we have had cumulative inflation of about 21.4% since the pandemic began in 2020, it also looks like some of the delayed costs that are associated with “historical results” such as insurance performance are now expected to continue that rise. . . and it may be that the rise in future premiums is no small number simply because of the recent history of losses in the insurance sectors.

Tom Anderson
Funeral Director Daily

In the funeral home business where most of the costs of doing business are fixed costs these increases eventually lower your margins and give you less money for other opportunities.

Couple that with the fact that many funeral home consumers may reach a Plimsol line of what they will pay for death care services and as your prices rise, they may choose to have fewer and less costly services.  That makes the rise of fixed costs, without great cost-containment efforts all the more crippling.

It’s important to note that your “Margins” are your Revenues minus your costs.  When it is difficult to raise revenues, such as times when lower-priced cremation keeps increasing in consumer choice, the best way to raise your margins is through cost-containment.  That does not simply mean to cut costs, but it calls for creative energy and thinking to look at other ways to do operational functions that may save costs — such as how you schedule staff.

In any regard, until one can get a handle on their costs I would use this time in the Fall of 2024 to take an itemized look at all of my expenses and try to imagine how I could do some things differently for 2025 that might reduce costs.  Being highly profitable takes effort and lots of thought. . . . I learned a lot by asking my staff for suggestions on how we could get more efficient. . . . and they usually pointed out really good suggestions that worked.

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