PROFITABILITY A PREREQUISITE FOR DIGNITY
Klarahill is the company that is consolidating Sweden’s funeral directors. In a highly fragmented market, the need for cooperation and long-term ownership is growing. In a time of digitalization and efficient processes, Klarahill stands out as a guarantor of a dignified and intimate farewell.
Klarahill was formed in 2014 by a group of family entrepreneurs within SBF, the Swedish Association of Funeral Directors. They realized the need for cooperation and, not least, a shared digital platform. Today, relatives of the deceased find a funeral director online, and many family-owned firms find it hard to reach out because they lack the resources for web development and keyword optimization. Accordingly, it is a great advantage for a small firm to be part of the Klarahill brand and network.
While Klarahill realizes the need for consolidation of the market, it also understands that a firm of funeral directors is a business requiring wholehearted entrepreneurship. It is therefore important that the contractor remains in the business as a partner. The MD of Klarahill is Niklas Steenberg:
“We usually compare it with the model of major Swedish supermarket chain ICA. Entrepreneurs join forces in a group in which participation can vary somewhat depending on circumstances, but where everyone shares the central functions while maintaining their independent entrepreneurship,” he says.
Mellby Gård initially invested SEK 50 million in Klarahill in 2015. Today, the company has 30 wholly and partially-owned funeral director offices in the regions of Skåne, Småland, Western Sweden and Stockholm. Sven Knutsson is Chairman of the Board and one of Mellby Gård’s representatives in the company, and he is pleased with its development.
“We have invested continuously in Klarahill as the company has expanded. Klarahill has now reached the critical mass required to continue expanding profitably on its own and we can see that more synergies can be achieved,”, he says.
“It is fascinating to see how isolated the individual firms have been historically,” he continues. “They have not exchanged experiences and they often find it unseemly to discuss money and profit. When we come in, we can contribute much that is positive, although we also disturb old, accustomed behaviours.”
Being able to address profitability and commercial viability has been an educational hurdle. In an business that deals with mortality and mourning, talking about money has been considered undignified. The consequences have been unfortunate: combined with digitalization, low profitability in firms that truly care about the meeting with the relatives of the deceased, has afforded space for new players providing direct cremation – a cost-efficient but impersonal digital process in which the relatives do not even attend the funeral.
“That is why we must dare to talk about profitability. If we want to have firms of funeral directors who care about the funeral ceremony and the wishes of the relatives, they must operate long-term sustainable businesses. Klarahill is to be the serious premium option, and it will never be a high-margin business – although, in the long term, profitability is a guarantor of dignity,” says Sven Knutsson.
Klarahill’s concept builds on regional cooperation and exchanging best practices. For example, firms that previously operated completely independently can now share transport vehicles and, not least, on-call staffing, without which independent funeral directors more or less never have any free time. The expansion must therefore be geographically cohesive, based on the locations in which the company is already present. Opening up a new region requires the possibility of linking a larger firm to the Group as a regional head office. During the year, Klarahill acquired Blixt Begravningsbyrå, with four offices in locations including Trollhättan and Vänersborg. This became Klarahill’s foothold in western Sweden.
“Mellby Gård has made this project possible. Few other owners combine the characteristics of a long-term perspective, financial strength, credibility and an understanding and sympathy for the business concept. A venture capital company with an exit horizon would never have been able to bring together these entrepreneurs, with their professional pride,” says Niklas Steenberg.
“We have prepared a document with our basic values, in which we state that the relatives of the deceased need a gentle rock, someone who shows understanding and consideration, but who can, in particular, make all of the practical arrangements in a time of sadness,” Sven Knutsson adds.
“At Mellby Gård, we see Klarahill, in turn, as a gentle rock for the funeral directors, by understanding their situation and taking care of the practical arrangements.”
The subsidiary Verahill has emerged alongside Klarahill. The company was founded in 2016/2017 and deals with family law. Over the past year, operations have gathered pace and today the company employs 25.
“Verahill has emerged through the need to address legal matters arising in connection with a death. Although we see considerable possibilities for expansion in general family law, such as prenuptial agreements, cohabitation agreements, estate settlement and tax returns,” says Niklas Steenberg.