How to Start a Funeral Home

Funerals offer people the chance to say goodbye to their loved ones, with their loved ones. Funeral homes, therefore, provide an essential and meaningful service to the community, and their largely recession-proof since demand is relatively constant. 

The US funeral services industry is worth $18 billion after years of steady growth. Starting a funeral home could be a very rewarding venture, as you’ll be providing a valuable service and making good money. 

If you’re considering such a venture, however, you’ll need to understand what you’re getting into from a business perspective. Fortunately, this step-by-step guide contains all the information you need to start a successful funeral home. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a funeral home has pros and cons to consider before deciding if it’s right for you.

Funeral home industry trends

Industry size and growth

• Industry size and past growth – The US funeral home industry is worth $18 billion in 2022 after expanding .6% annually the last five years.((https://www.ibisworld.com/industry-statistics/market-size/funeral-homes-united-states/))
• Growth forecast – The US funeral home industry is projected to decline 1.8% in 2022. 
• Number of businesses – In 2022, 24,554 funeral home businesses are operating in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/funeral-homes-united-states/)) 
• Number of people employed – In 1022, the US funeral home industry employs 119,167 people.((https://www.ibisworld.com/industry-statistics/employment/funeral-homes-united-states/)) 

Trends and challenges

Trends in the funeral home industry include:

• More and more people are pre-planning their funeral arrangements so their families don’t have to be concerned about the costs.
• Eco-friendly funeral products and services are trending, including bio-degradable caskets and space-saving burial techniques.

Challenges in the funeral home industry include:

• E-commerce is allowing people to purchase caskets online for less, reducing casket sales for funeral homes.
• The rising number of cremations is also reducing the merchandise sales for funeral homes. 

Demand hotspots

• Most popular states – The most popular states for funeral directors are Oregon, Arizona, and Pennsylvania.((https://www.zippia.com/funeral-director-jobs/best-states/))
• Least popular states – The least popular states for funeral directors are Montana, South Carolina, and South Dakota.

What kind of people work in funeral homes?

• Gender – 35.3% of funeral directors are female, while 64.7% are male.((https://www.zippia.com/funeral-director-jobs/demographics/))
• Average level of education – The average funeral director has an associate’s degree.
• Average age – The average funeral director in the US is 50 years old.

How much does it cost to start a funeral home business?

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: 

• Embalming tables
• Embalming machine
• Mortuary stretchers
• Body coolers
• Artery tubes
• Cavity injectors
• Drainage tubes
• Hydro aspirators
• Needle injectors
• Inventory of caskets
• Inventory of urns
• Hearse

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

How much can you earn from a funeral home business?

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.

What barriers to entry are there?

There are a few barriers to entry for a funeral home. Your biggest challenges will be:

• The high startup costs of the building, equipment, and inventory
• Meeting state licensing requirements to be a licensed funeral director

Step 2: Hone Your Idea

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. 

Why? Identify an opportunity

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.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

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. 

How much should you charge for funeral services?

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.

Who? Identify your target market

Your target market could be anyone, so you should spread out your marketing to include sites like TikTok, Instagram, Facebook, and even LinkedIn.

Where? Choose your funeral home location

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.

Step 3: Brainstorm a Funeral Home Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “funeral home” or “funeral parlour”, boosts SEO
• Name should allow for expansion, for ex: “Eternal Rest Funeral Home” over “Veteran’s Funeral Home”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step 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.

Step 4: Create a Funeral Home Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A brief overview outlining the funeral home’s mission, goals, and key highlights, serving as a snapshot for potential investors or partners.
• Business Overview: A comprehensive description of the funeral home, its mission, values, and the specific funeral services offered, highlighting its unique selling points.
• Product and Services: Detailed information about the range of funeral services provided, including burial and cremation options, funeral planning, and any additional offerings like grief counseling.
• Market Analysis: Examination of the funeral industry market, identifying target demographics, trends, and potential challenges to ensure a solid understanding of the business’s environment.
• Competitive Analysis: Evaluation of other funeral homes in the area, assessing their strengths and weaknesses, to determine the funeral home’s competitive edge and strategic positioning.
• Sales and Marketing: Strategies for attracting and retaining clients, encompassing advertising, online presence, community engagement, and other methods to promote the funeral home’s services.
• Management Team: Profiles of key personnel, highlighting their expertise and roles in the funeral home’s operation, instilling confidence in investors and stakeholders.
• Operations Plan: Detailed information on the day-to-day operations of the funeral home, covering staffing, facilities, equipment, and logistics to ensure smooth service delivery.
• Financial Plan: A comprehensive financial overview, including startup costs, revenue projections, and profit margins, providing a clear picture of the funeral home’s financial viability.
• Appendix: Supplementary materials such as licenses, permits, resumes of key personnel, and additional documentation supporting and enhancing the information presented in the 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.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

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. 

Choose your business structure

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:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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.

Step 6: Register for Taxes

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.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a funeral home business. 

Step 8: Apply for Funeral Home Business Licenses and Permits

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.

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.

Step 9: Open a Business Bank Account

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. 

Step 10: Get Business Insurance

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:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

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.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

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. 

Marketing

For your funeral home business, the marketing strategy should focus on showcasing your compassionate services, your commitment to honoring the lives of the departed, and the support you provide to grieving families. Emphasize your expertise in funeral planning, the range of services you offer, and your dedication to helping families through difficult times with dignity and respect. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should convey empathy, professionalism, and respectfulness. This includes your logo, business cards, brochures, and the appearance of your funeral home.
• Community Outreach: Establish strong relationships with local hospitals, hospices, and religious organizations. Participating in community events can also help in building a compassionate and caring image.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a website that offers clear information about your services, pricing, and support resources. Use SEO best practices to rank for local searches related to funeral services, cremation services, and memorial planning.
• Social Media Engagement: Utilize platforms like Facebook to provide helpful resources, share obituaries (with family permission), and post about community involvement. The tone should be respectful and supportive.

Content Marketing and Engagement

• Informative Blog: Share articles that help people understand funeral planning, grief support, and remembrance options. Offering valuable content can establish your funeral home as a helpful resource in times of need.
• Email Newsletters: Maintain communication with your community through newsletters that offer grief support resources, information on pre-planning services, and updates on your facilities or services.

Experiential and In-Person Engagements

• Open House Events: Offer open house events for the public to tour your facilities, meet your staff, and ask questions in a non-stressful environment.
• Grief Support Workshops: Host or sponsor workshops and support groups for those dealing with loss, reinforcing your commitment to the community.

Collaborations and Community

• Partnerships with Local Businesses: Collaborate with local florists, caterers, and religious centers to provide comprehensive services to families.
• Community Involvement: Engage in community support activities, sponsor local events, or offer educational workshops on end-of-life planning.

Customer Relationship and Loyalty Programs

• Aftercare Services: Offer follow-up services such as grief counseling referrals or assistance with thank-you cards, showing a continued commitment to families even after the funeral service.
• Pre-Planning Consultations: Provide consultations for pre-planning funeral arrangements, helping people make informed decisions for themselves or their loved ones.

Promotions and Advertising

• Targeted Local Advertising: Use local newspapers, church bulletins, and senior living publications to reach potential clients.
• Community Seminars: Offer free seminars on topics like estate planning, will writing, and funeral pre-planning to provide value to the community and introduce your services.

Focus on USPs

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: 

• Professional, caring services to celebrate your lost loved one
• Funeral services for less to ease your burden
• Save your family time and money with funeral pre-planning

Networking

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. 

Step 12: Build Your Team

Potential positions for a funeral home business include:

• Embalmers – embalm bodies prior to the funeral and burial
• Assistants – assist with arranging funerals
• General Manager – scheduling, ordering, accounting
• Marketing Lead – SEO strategies, social media

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. 

Step 13: Run a Funeral Home – Start Making Money!

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.