I was traveling on an Amtrak train to a dinner meeting in Philadelphia. Two portly business men wedged in next to me and had an animated conversation about which companies do well despite a down economy. Here’s how the conversation went:
Businessman #1: You know, I’ve taken such a beating on the stock market, I just don’t know where to put my money to protect it and grow it. But I was thinking – one thing’s for sure – lots of people are going to continue dying despite the recession.
Businessman #2: So what kind of business insight is that?
Businessman #1: Funeral Homes, dummy. That’s where the action is. People still have to cremate or bury their loved ones, even in tough economic times.
Businessman #2: Nah, that’s not really scalable. I mean, you can’t save on costs with more volume. It’s fixed – a coffin costs what it costs. What you should really get into is Assisted Living facilities. Now THAT’s a growth market.
Businessman #1: No way, people can’t afford to pay for assisted living after the market crash. Their savings won’t last long enough to make it worth my while to take them in. Then when it runs out, what can I do? You can’t put them out on the street so you’re stuck with them till they die.
Businessman #2: You don’t have to be stuck with them, when their cash runs out you can transfer them to a lower quality facility. Then Medicare will pay for it.