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March of Progress
by Susan Loving
In 1957, William C. and Julia R. March started a funeral home in their Baltimore row house. He was a postal worker looking for additional income to provide for his childrens' education. At the suggestion of a buddy in the service, he had used his GI benefits to go to mortuary school in New York. Things were slow at first -- two funerals the first year, four the second. By 1965, the Marches were conducting more than 200 funerals a year.
The business did what it was intended to do -- it enabled the March children to go to college. The two daughters became nurses, one son became a CPA after graduating from Loyola and the other graduated from Johns Hopkins with the intention of heading to law school. But eventually all brought their talents back to the family business, which continued to grow.
In 1973, the business became a combination operation with the addition of King Memorial Park Cemetery and in 1978 a modern funeral home replaced the row house. In the 1980s, Marcorp LTD and a handful of subsidiary businesses were born as the family decided to become a full-service funeral operation. Believing the African-American community was underserved by insurance companies, the March family pioneered preneed sales in Maryland. They developed a trademarked bereavement program.
Today, the Marches have started bringing a third generation into the business and are working to expand their company's reach. They already serve Islamic families and plan to expand their service to the growing Hispanic population. Through The March Alliance, a proposed merger of independent funeral service companies serving the African-American community, the Marches plan to build a national presence.
Brothers Victor C. March Sr., CEO of Marcorp, and Erich W. March, president of King Memorial Park and vice president of funeral service, recently talked to ICFM about their family business and their plans for The March Alliance. They clearly enjoy their work -- and enjoy talking about it. Both answered questions quickly, interrupted each other and laughed easily. Victor, the CPA, had just returned from three weeks at Harvard, where he is participating in the three-year Harvard Business School Owner/President Management Program. Erich, the would-be lawyer, is an artist and writer who readily admits his cell phone addiction; he let Victor field most of the questions while he made business calls.
You all grew up in that first funeral home, living upstairs. Did you help with the business?
Erich: We were trained to answer the phones at age 10, and set up the chapel with the chairs.
Victor: Vacuum, empty trash cans, clean bathrooms, move chairs.
Erich: I hated chairs; I hated folding chairs with a passion. We had marble steps -- that's one thing Baltimore is famous for -- and you had to scrub the marble steps every day, because with the traffic in and out of the funeral home, the marble would pick up a lot of dirt.
Victor: Polish the brass.
Erich: Polish the brass on the doorknobs!
Victor: Every Saturday -- I hated that. [But] we didn't get an allowance; you got paid for what you did. So if you didn't do any work around the business, you didn't get any money. It instilled a work ethic.
Did you grow up planning to go into the family business?
Erich: We all went to school with different ideas of what we would want to be. I went to Johns Hopkins, did a prelaw program with creative writing and psychology. I was headed, in my mind, to get a law degree. But at the time, in '74, the business was doing so well my father needed help.
Victor: We all knew that eventually this is where we wanted to be. But my parents really understood, I think, the need for us to be able to fly on our own for a little bit before we committed to being involved in the family business. My interest was in numbers, and my dad encouraged me to seek a CPA, because at that time there were only two African-American CPAs in the state of Maryland. So he said if you want to do something and be able to contribute to the family business, this would be an ideal industry for you, and it is. I got offers from all the big eight accounting firms. I left Coopers & Lybrand and came to the family business [in 1979]. I was the first controller for the family business.
Both of my sisters are registered nurses; they both worked in major hospital institutions for a few years, then each of them went to mortuary school and started working with the family business.
Some of your children are now coming into the business?
Erich: My nephew [Victor Jr.] is heavily involved; our sister's son [Nathan] is heavily involved; and my son, he went to Morehouse in Atlanta and he came back about 9 months and he went back to Atlanta. My daughter just graduated from the Wharton Business School and now she's on Wall Street in New York. It's like we started out. Eventually those talents are going to come back home to roost.
Did your parents retire and hand the business over to you or did they ease out?
Victor: My dad had a lot of wisdom; he passed the baton to the next generation early enough in his life [in 1988] that he would be there if we needed assistance. Too often in this particular industry the owner or the founder dies in the saddle, and next generation has never been in the position to have to run the organization, to have to make those critical decisions. And now here they are, they find themselves in (charge) and they don't have the experience and the background to do it.
Erich: Or the opportunity to be progressive. A lot of the second generation are stifled by the original owner, who is set in their ways, not willing to expand or to branch out into new technologies, and then the children get very frustrated.
Victor: The funeral industry historically is very slow to change. When the world went to automobiles, the funeral industry still had horse and buggies. The funeral industry was probably the last industry to computerize. Because they saw it as one, not traditional, and two, impersonal -- we're a service industry. We incorporated computers in 1979, when I came on board. We developed the first computer software for the industry, it was called Boss. Boss had over 1,200 funeral homes across the country utilizing the system; we sold it in 1985.
March Funeral Homes became a combination operation in 1973, with the beginning of King Memorial Park Cemetery. What type of cemetery is it?
Victor: We are designated a memorial park, but when we developed an additional 30 acres, we designated a certain section for uprights. People want choice, and that's what we've tried to provide.
You have two small cremation gardens. What is the cremation rate for your families?
Victor: It's still extremely low. Cremation doesn't really appeal to the African-American community. For us, the funeral is seen as a celebration of life. It's a community event. It was our homegoing; it was our freedom.
Your mausoleum was the first in an African-American cemetery?
Victor: Yes, in the country. We had no idea until the designers brought it to our attention that this is the first anyone knows of in an African-American owned and operated cemetery.
Did you anticipate a demand for mausoleum space or were you simply trying to make use of a particular sort of land?
Victor: We did it obviously to be able to provide a full array of options and alternatives, ground burial or entombment.
Erich: And it's economically beneficial to the cemetery because of the space utilization, in terms of being able to have five tiers of burial, as opposed to ground space, which can only take one or two.
Victor: Other cemeteries in our market area were doing very, very well with the mausoleum sales, so obviously for us to effectively compete, we had to offer that as well. And we felt it went in line with our [Egyptian] heritage, I guess to some extent.
Erich: Phase I [240 crypts] is almost sold out. Phase II has got an architectural plan for it and hopefully we'll build that in the next three years. It's actually a three-phase [1,800-crypt] complex. Eventually all three phases will be enclosed by a common roof and at that point we'll have an indoor chapel where funeral directors without funeral homes can conduct services.
The lawn crypt has not been built, but we are preselling it. That's another project which is right in front of the mausoleum itself. We have a circle designated for that that's going to hold 1,500 double-
interment lawn crypts. That's under contract to Vantage Vault. There are also sites for private
mausoleums, as well.
King serves mainly African-American families?
Victor: Yes. The Islamic community owns about 5 acres within the [50-acre] cemetery. They bought early on so that they could have a community burial ground. The head has to face east; they have to bury with the body in contact with the earth. Basically what happens is we transport them in a casket to the cemetery, but they are then taken out of the casket and laid on the burial ground and then an inverted dome vault is placed over the top. That way the body is in direct contact with the earth.
By the time this article is in print, the cemetery may be much larger.
Erich: We're under contract for an additional 103 acres, so it will be a 153-acre park, eventually.
We had to do some politicking, because under Baltimore County zoning, you can't have a cemetery larger than 100 acres. We had to actually get the Legislature to pass a law allowing for a 200-acre cemetery in Baltimore County.
Then of course there was the issue of getting the special exception to allow a cemetery. There isn't a specific zoning for cemeteries. So of course you have to go to Baltimore County for that.
How long did it take to get through the whole process?
Victor: Two years almost. We had to get all that in place before we were able to finalize the deal.
In 1978, you moved out of the row house into a facility designed as a funeral home, the William C. March Funeral Home. That must have been a big change.
Victor: At the time we designed this facility, we were serving about 1,200 families a year out of the row home, which was unheard of. We built this facility to accommodate 1,500. The first year we were in this building, we went from 1,200 to 2,000 funerals.
The row house was very small. The remains were literally lined up along the wall. There were no private viewing rooms whatsoever. It was just one large room and the remains were head to toe, head to toe. We went from a 3,000-square-foot funeral home to a 20,000-square-foot funeral home and we were still right back where we started, over capacity.
We made some mistakes in building this particular funeral home. One of them was that we built two chapels. The traditional chapel seats 350 people; the contemporary room seats about 150. Well, unfortunately everyone wanted the traditional chapel -- even if they only had five people in the family. In our other facility on the west side, both of our chapels are identical. The other mistake that we made was we didn't incorporate private corridors for behind-the-scenes operations, and our funeral homes are open all day long, from 9 o'clock in the morning till 8 p.m. at night, to accommodate people's work schedules.
When we designed our west Baltimore facility, we took all the mistakes that we made here and made sure that we didn't replicate those.
Before you added the west funeral home, you formed Marcorp and several subsidiaries.
Victor: Maryland has some unique, quirky laws that prohibit corporate funeral homes from owning or operating another funeral home. So if you own a corporate funeral home, you can only own and operate one facility, and you cannot engage in any other business other than funeral service. A corporate license is very much like a liquor license, so you can only have one, and there are only 60 corporate licenses in the state for funeral homes. This is for a corporate funeral home -- obviously, you can operate a funeral home as a sole proprietorship or a professional association.
Because the funeral homes were precluded from engaging in any other form of business, we had to set up other corporations and subsidiaries in order to create a full-service entity.
Monetary Development Group also was formed at that time because we knew that a large percentage of the families that we were serving did not have adequate insurance to cover funeral costs.
Erich: That's a historical problem as well. The African-American community was very much underserved by the insurance industry generally. Typically they were only offered industrial-type policies, which meant that the maximum was usually around $1,000 in insurance. And of course funeral bills exceeded that. Industrial meant door-to-door solicitation and collection. The agent would actually on a weekly or monthly basis go around to knock on doors and collect $1.50 on these small policies.
What percentage of your business is preneed?
Victor: It's still relatively small. Maryland was kind of slow in getting into preneed. As a matter of fact, we were the leaders in preneed as well. We started our preneed company in 1985. Preneed insurance up until this past October [1999] was illegal in the state of Maryland. You could not offer preneed insurance. What we did is we created a program that offered final expense insurance and we structured our program giving our families the benefit of planning their funerals without locking it into a guaranteed contract.
What got you interested in preneed?
Victor: Again, it went back to the fact that most of the families we were serving had the industrial life insurance policies, and they bought those policies back in the '50s and the '60s when the average was $1,000. That's all the insurance they had. In 1985, the average funeral was probably close to $3,500. So there was this huge difference between how much insurance they had and what the average funeral was costing. Many of the families were forced to come up with the difference, and that was a struggle for a lot of families -- they were having to pass the hat.
We knew that we had to start seeding the future, and we had to see to it that families understood the importance of funding funerals for the future.
We felt that it was important that families understood the value of planning ahead and not leaving that to their loved ones at a time they're least likely able to make rational decisions. So we started promoting preplanning and prefunding. And it was a long, drawn-out process. It didn't catch on readily; it was a slow process, but eventually it started catching on. I would say that probably 5 to 8 percent of our current funerals have been preplanned, but it's growing every year, because those families that preplanned 10 years ago, those deaths are now starting to happen. It'll continue to grow, no question about it.
Your funeral business also serves mainly African-Americans?
Victor: Our percent is about 95 percent African-American, 5 percent all other. To a great extent, funeral service is still based on color lines. We serve the Pakistani community.
Erich: Islamic community -- most of them are Pakistani.
What percentage of the Baltimore business do you have?
Victor: Within funeral homes, we serve about 50-55 percent of the [African-American] market. There are 42 African-American funeral homes in Baltimore.
Erich: There are about five what I would consider mid-sized to large funeral home operations besides us.
Victor: As you know, the national average funeral home is 100 services a year. We're not typical.
Are you considering adding more funeral homes?
Victor: We're actually looking at all our possibilities of doing that right now. We're looking at moving more into the county areas, where we're seeing the demographics starting to shift, so we want to make sure we're there, where our community is moving. In getting a third and fourth location we're going to be positioning ourselves for not only demographic shift but also other ethnic markets we want to be able to cater to, that being the Hispanic and the Asian community. They are growing communities.
So you would be hiring counselors from those communities?
Victor: Most definitely. We're strong believers that you have to be able to see yourself. We're going to position ourselves in areas that have a good cultural mix of people so that we'll be able to draw on that mix. We're looking to expand not only in our own back yard, in terms of the Baltimore metropolitan area, we're looking at developing a regional presence with The March Alliance.
Erich: In Baltimore, where 65 percent of the population is African-American, the conglomerate-owned cemeteries which surround the city are basically in competition with us for the African-American funeral market, and we're holding our own against that invasion because of our reputation.
Victor: We formed The March Alliance primarily because independent African-American firms do not have the capability or the wherewithal to fight on the preneed battleground. Most firms do not have any existing preneed program in place, are not particularly comfortable with preneed because it in essence forces you to wear a different hat. You're no longer just wearing the service hat, now you've got to almost wear a salesman's hat. And that's uncomfortable for many in funeral service.
You're looking to sell your administrative know-how to other companies.
Victor: As well as other services. We're able to bring a lot to the table. Our preneed program, our aftercare programs, grief-counseling program, our marketing experience, telemarketing. We pretty much have everything that you would typically find in most of your larger organizations. We have distributorships -- Pyramid; that would be an integral part of the program. Just the sheer buying power because of sheer numbers, you get greater discounts.
For us, obviously the funeral industry is an extremely vital part of our economic strength within our own community. Prior to desegregation, within the African-American community we had all of our own businesses. We had our own banks, hotels. Since desegregation, we've pretty much lost a lot of our businesses. Obviously we don't want to see any more erosion. Our thrust is to be able to bring like-minded professionals together where we can form our own organization and entity that will be able to effectively compete.
We're currently working with about 27 firms within a 200-mile radius to formalize this entity.
Are you looking to become a national company?
Erich: Regional to begin with. In our analysis, some of the other so-called acquisition companies spread themselves too thin, in terms of distance and effective management of properties. There are a couple of African-American acquisition companies out there, but they have a property in Chicago, they have a property in New York, have a property in Atlanta. What we're saying is they're not able to effectively oversee those operations because of the distances involved. We're looking to be any place within a four- to five-hour drive. So you can react a lot quicker to any situations that require management.
Victor: Our goal is to develop a regional presence. In doing so, our thrust is more on the merger than it is on the acquisition. We are an M&A company. Obviously, we want to be able accommodate any firm that's interested; if they're interested in pure acquisition, then we'll certainly entertain that. But we feel that it's more important -- and we feel we'll be more successful -- if we create an entity where other firms maintain ownership, an environment where we're merging in together. Everyone becomes a partner in the total entity.
One of the major problems also that the major consolidators have is that their value, their stock, [is subject to] market influences because they're publicly traded. Their value is based on the whims of the market. In our situation, we're not talking about being publicly traded, we're talking about maintaining our stock within our organization.
And you have the option to plow the money back into the business without having to explain why you're not giving out dividends.
Victor: That's right. We don't have to worry about the market, or stockholders saying "we want to see our return on our investment." We all are the owners and we can reinvest back into businesses because we see the need to do such.
Erich: We're very committed to reinvesting back into our businesses.
What sorts of lessons have you taken from what's happened to the big public companies and the industry in the past couple of years?
Victor: It's interesting that you ask. One of our case studies at Harvard was SCI. In looking at the SCI model, they unfortunately created a situation where they had to grow by 20 percent a year. And the only way that they could grow was to acquire. And by acquiring at such high multiples that put them in a position where they weren't able to sustain that kind of growth.
One of the other major problems that SCI found themselves is that they only had 8 percent market penetration in the United States and decided to go international and went into other countries that typically did not have the same type of funeral economics that we have in this country.
What did we learn? Not to pay more than a business is worth.
How did you decide how to structure The March Alliance?
Victor: We went through a learning curve there. We started out thinking acquisition, but we soon realized that was not the most attractive scenario to most successful funeral home owners. Their identity was tied to their business; it's like selling your child. So we evolved in our thinking to make sure that there was still that hands-on management. Because that caused a lot of the failures for a lot of the firms that were acquired by outside companies. They would do these three- and five-year management contracts with the previous owners, but after that they couldn't care less, they were gone. And a lot of the business goodwill and everything else left with them. We wanted to make sure that we kept that community goodwill and at the same time improved their overall operation.
So the companies that you're talking to now are companies that you contacted?
Erich: Identified. We looked at various companies throughout the 200-mile region and just from interaction you know the people out there who are pretty successful, and those are the people who we want to be part of the alliance.
One funeral director said "Why do I want to be part of the alliance? I'm strong now." I said "That's why you're invited; we don't want any weak companies, that doesn't make sense to us." We want strong, viable companies to be a part and bring something to the table. That's where we are right now -- we're still dancing, we're dating -- marriage hopefully is in the future. But we're getting to know each other, how each other thinks. We've had -- we call them symposiums.
Victor: Four meetings, four symposiums.
What states are we talking about?
Erich: Pennsylvania, Delaware, New Jersey, Maryland, Virginia -- a 200 mile radius from Baltimore.
Victor: We can drive there in five hours -- actually about four hours.
Erich: Our goal is to within that 200-mile radius to get well situated, get our structure in place. After we've solidified that, developed our whole program and our structure to the point where we feel it's been successful, worked out all the kinks gotten it well under way, then we'll start looking at the next 200-mile radius and ultimately growing outwards.
We're working through some of the legalities of it all now with the various firms that have shown an interest to proceed. So we're going through the actual developing the structure and the procedure.
Victor: It's almost turnkey though. Once a firm has bought into the alliance, our whole operation in terms of literature and accessory items, marketing pieces, television commercials, radio commercials -- it's turnkey. All we have to do is put their tagline on those particular things and they're in business, from day one.
One of the things that we are looking to really help them achieve is market presence in terms of preneed by hiring and recruiting preneed salespeople.
Erich: And training. We feel that training is a very integral part of the success of any organization. We have within our organization a person who just does training; we've got a human resources department. A smaller firm typically is maybe a five- to 15-member type operation. They don't have the segmentation within that to make sure that they're able to offer those types of services. Since we've developed those programs, we can replicate them.
The slowest point is just getting started; that's going to take the longest time. And giving people an opportunity for that look-see. We have to create it in such a way that firms are able to join and have some comfort in knowing that if it's not right for them that they can go back to the way they were. Because right now, with regard to most consolidators, people are a little skeptical about being part of a larger entity because of what might happen, particularly with the value of their enterprises. This way we've created it in such a way that if they feel it's not right for them that they can go back to the way they were and continue to operate as an independent.
You're centrally located for the East Coast, but it could take you a while to get across the country.
Erich: Our focus has been primarily on the African-American market but also other ethnic markets. When you really look at the demographics, 60 percent of the African Americans are on the East Coast. As we spread out toward the middle [of the country] there's fewer and fewer and fewer. So if we just focused on the East Coast, we would have a huge market.
You seem to have a positive outlook on the future of the industry.
Victor: Most definitely. I'm excited about the future. I think the challenges before us are ones that I certainly am not fearful of and look forward to addressing. I think there's a lot of change still to be made in this industry and hopefully we'll be a part of it. I love change; I like to cause change.
Susan Loving is managing editor of International Cemetery & Funeral Management.
Copyright ICFA 2000
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