Business Model Innovation for Funerals
On tax day, how fitting to write about life's second certainty besides taxes — death, of course. Interesting profile in Newsweek of how one entrepreneur is trying to create a new business model for the funeral industry — and how the entrenched industry is resisting. Two points of note …
1. Notice how many of the business model norms are entrenched over decades of industry practice. When one entrepreneur tries something different, the entrenched industry tries hard to protect its territory. The same thing has happened for realtors who tried to break through the traditional commission model — the established industry tries to lock them out.
2. The article refers to the "roll-up" approach where national companies acquire multiple local funeral homes to try to achieve economies of scale. This strategy may create financial returns briefly, but is very difficult to sustain. There is a great profile of a failed roll-up strategy in the funeral industry in Billion Dollar Lessons by Paul Carroll.
