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. Hereâ€™s how the conversation went:
Businessman #1: You know, Iâ€™ve taken such a beating on the stock market, I just donâ€™t know where to put my money to protect it and grow it. But I was thinking – one thingâ€™s for sure â€“ 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. Thatâ€™s where the action is. People still have to cremate or bury their loved ones, even in tough economic times.
Businessman #2: Nah, thatâ€™s not really scalable. I mean, you canâ€™t save on costs with more volume. Itâ€™s fixed â€“ a coffin costs what it costs. What you should really get into is Assisted Living facilities. Now THATâ€™s a growth market.
Businessman #1: No way, people canâ€™t afford to pay for assisted living after the market crash. Their savings wonâ€™t last long enough to make it worth my while to take them in. Then when it runs out, what can I do? You canâ€™t put them out on the street so youâ€™re stuck with them till they die.
Businessman #2: You donâ€™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.