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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on June 7, 2022
Investment range
$151,550 - $289,100
Revenue potential
$624,000 - $1.95 million p.a.
Time to build
1 – 12 months
Profit potential
$62,000 - $195,000 p.a.
Industry trend
Declining
Commitment
Full-time
Here are a few things you should consider before starting your funeral home:
Starting a funeral home has pros and cons to consider before deciding if it’s right for you.
Trends in the funeral home industry include:
Challenges in the funeral home industry include:
Startup costs for a funeral home range from $150,000 to $300,000. Costs include a down payment on a building, preparation of the space, equipment, a hearse, and an inventory of caskets and urns.
You’ll need to meet the funeral service education requirements of your state to become a licensed funeral director. According to the American Board of Funeral Services Education, most states require post-secondary education, the passage of the National Board Examination, and serving an internship for one or two years.
Check with your state board for specific requirements. Educational resources and information are also available through the National Funeral Directors Association.
You’ll need a handful of items to successfully launch your funeral home business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| 30% down payment on a building | $75,000 - $125,000 | $100,000 |
| Preparation of the space | $25,000 - $50,000 | $37,500 |
| Embalming and other equiment | $10,000 - $20,000 | $15,000 |
| Hearse | $10,000 - $40,000 | $25,000 |
| Inventory of caskets and urns | $30,000 - $50,000 | $40,000 |
| Total | $151,550 - $289,100 | $220,325 |
The average cost of a funeral is $6,500. The profit margin of a funeral home after all costs is about 10%.
In your first year or two, you could hold eight funerals per month, bringing in $624,000 in annual revenue. This would mean $62,000 in profit, assuming that 10% margin. As your funeral brand gains recognition, you might hold 25 funerals per month. With annual revenue of $1,950,000, you’d make a healthy profit of $195,000.
There are a few barriers to entry for a funeral home. Your biggest challenges will be:
Now that you know what’s involved in starting a funeral home, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research funeral homes in your area to examine their products and services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a funeral parlour that sells biodegradable caskets, or a funeral establishment that offers cremation services.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as celebration of life services or eco-friendly funeral services.
This could jumpstart your word-of-mouth marketing and attract clients right away.
In addition to funeral services, you can sell caskets and urns. You can also offer cremation services, but that would add significantly to your startup costs.
The average cost of a funeral is $6,500. After all costs of the merchandise, labor, and overhead, your profit margin should be about 10%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market could be anyone, so you should spread out your marketing to include sites like TikTok, Instagram, Facebook, and even LinkedIn.
Choosing the right location for your funeral home is crucial for ensuring its success. Look for a spot in a convenient and accessible location, such as a busy street or a residential area. Consider the size of the property and the facilities, ensuring that they can accommodate the needs of clients and staff.
Additionally, assess the local regulations and zoning laws to ensure compliance and obtain any necessary permits. Depending on the type of funeral services you plan to offer, you may also want to consider the proximity to cemeteries, crematoriums, and other related services.
By strategically choosing the right location, you can establish a reputable and successful funeral home that provides compassionate and personalized services to families.
It’s possible that you could find a location to rent for your funeral home instead of purchasing a building. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
Here are some ideas for brainstorming your business name:
Discover over 200 unique funeral home name ideas here. If you want your business name to include specific keywords, you can also use our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to funeral homes.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your funeral home will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a funeral home business.
Starting a funeral home business requires obtaining a number of licenses and permits from local, state, and federal governments.
You’ll need a funeral director’s license from your state. Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your funeral home business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as passare, Osiris, or FrontRunner, to manage your processes, project coordination, inventory, invoices, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your funeral home meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your funeral home business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a funeral home business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in funeral homes for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in funeral homes. You’ll probably generate new customers or find companies with which you could establish a partnership.
Potential positions for a funeral home business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Funeral homes represent an $18 billion industry that fills an essential role in the mourning process. By starting your own funeral home, you’d have the opportunity to ease difficult times in people’s lives, provide a valuable service, and make a good living at the same time.
Now that you know what’s involved, it’s time to get to work and launch your successful funeral home.
Funeral homes can be very profitable. More importantly, though, funeral homes provide an essential service and comfort for people during difficult times.
Service Corporation International (SCI) is currently the largest funeral home business in the United States, with over 1,800 locations across North America.
A successful funeral home should offer compassionate and personalized services to families during their time of need. This includes providing a range of funeral service options, such as traditional funeral services, cremation services, and memorial services.
The type of food served at a funeral may vary depending on cultural and religious customs, personal preferences, and budget. Common options include finger foods, sandwiches, fruit trays, and desserts.
The most common type of funeral in the United States is a traditional funeral service, which typically includes a visitation or wake, a funeral ceremony, and a graveside service. This type of funeral is often associated with religious or cultural traditions and may include elements such as prayers, hymns, and eulogies.
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