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A funeral home business handles funeral services for those who have died. Funeral home businesses provide burial, cremation and memorial services for those who have passed away. These businesses play an important role in providing families of the deceased with much-needed closure.
Who is this business right for?
If you are interested in helping people cope with the death of loved ones, friends and colleagues, the funeral home business is for you.
What happens during a typical day at a funeral home?
The average funeral home business owner meets with prospective clients, handles the demands of existing clients, performs research on funeral-related equipment such as caskets, steers marketing efforts and delegates work to employees.
What is the target market?
The ideal customer is willing to spend top-dollar on funeral services.
How does a funeral home make money?
A funeral service makes money by selling caskets, cremation services, funeral services, flowers, urns and other items/services related to death.
What is the growth potential for a funeral home?
This business is poised to grow quite rapidly as the baby boomer age cohort passes through their golden years. A considerable portion of the population is reaching its 60s and 70s, and a funeral home business owner will benefit from this demographic trend.
What are some skills and experiences that will help you build a successful funeral home?
A funeral home business owner who has solid people skills, an aptitude for marketing and the ability to console those who are grieving will succeed in this industry. The key is to get to know the community. Develop a rapport with locals and market your funeral home business in a tasteful manner, and you will gradually acquire new clients.
What are the costs involved in opening a funeral home?
A funeral home business requires equipment for embalming and cremation. A cremation table, cremation system, hydraulic lifts, refrigerated storage, computer, printer and filing system are necessary. Caskets must be purchased along with clothing and additional convenience items. The business requires laborers, insurance, operating space and a parking lot. The viewing area will require tables and couches. A hearse is also necessary.
What are the steps to start a funeral home?
Once you're ready to start your funeral home, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your funeral home is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your funeral home keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a funeral home?
Relationships are at the foundation of this business. Funeral home business owners who establish a flawless reputation within their local community will win the business of locals for generations. Be sure to market your business in a respectful manner. Always be there to console those who have lost a loved one. If you do not provide such support, customers will speak negatively about you to others in the community. Do not lose sight of the fact that your role as a funeral home business owner is to provide funeral services as well as emotional support in the aftermath of death.
It is important to note the federal government requires funeral homes to have specific amenities. The embalming room must be located in the basement and secluded from the remainder of the business. This room must have the proper ventilation of two vents on the outside wall along with drains installed in the floor with plumbing that is distinct from the central pipes. Your casket and burial vault display section must be on the main level. Do not forget to make your establishment handicap-accessible. Every funeral home must have a concrete room void of windows with flame-resistant files and a flame-resistant door. Furthermore, you must file a general price list with your state government each year to ensure fairness in prices.
How to promote & market a funeral home
Market to those who are located close to your business through flyers, leaflets, local radio/TV advertisements and social media. Be sure to advertise in the local newspaper. Your target clientele is the elderly. Senior citizens are inclined to read tangible newspapers rather than online news websites. Focus on optimizing your online content so locals can find it with ease. This is referred to as search engine optimization (SEO). Use keywords, especially those that are relevant to those in your community such as the town/city name, the names of local streets and even the names of neighborhoods. Though senior citizens might not use the web at a high frequency, their offspring and grandchildren do. If you make a positive impression on a senior's relative, there is a good chance that individual will pass on the information gleaned from your funeral home's website to their elderly parent or grandparent.
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How to keep customers coming back
Word of mouth advertising is important to this type of business. This means pleasing current customers is essential to growing your business across posterity. Exceed current customers' expectations and they will speak highly of you to friends, family and co-workers in the community.
How and when to build a team
Build your team right away. Every funeral home requires an array of employees to handle funeral services. You will need a funeral home manager, a receptionist, an administrator, a marketing professional, an accountant, and general support staff.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a funeral home. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
Funeral home businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
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Certificate of Occupancy
A funeral home is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a funeral home.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your funeral home will be in compliance and able to obtain a CO.
How much can you charge customers?
The typical funeral costs around $6,000 to $7,000. This cost includes embalming, cosmetics, viewings, transportation expenses and professional charges. However, it is possible to charge more if your funeral home business offers extra services.
What are the ongoing expenses for a funeral home?
A funeral home must pay for its operating space, labor, utilities, marketing, caskets and equipment for embalming and cremation. Embalming machines do not last forever. A single embalming machine costs around $3,000 or more. Add in the costs of hydraulic lifts, refrigerated storage, an embalming table, embalming fluid, caskets, makeup, clothing and urns and you should budget in at least $5,000 to $10,000 per year for equipment.
Consider contacting a real estate agent to find an affordable building to rent where you can operate your funeral home business. Rent will likely run between $700 and a couple thousand dollars per month depending on the building's size and location. Budget at least a couple hundred dollars per month for marketing. Utilities including high-speed Internet will cost between $100 and $200 per month.
Your funeral home business manager will command a salary between $35,000 and $65,000 per year. A marketing guru will require an annual salary of $35,000 to $55,000. An accountant will command an annual salary in the range of $35,000 to $75,000. A funeral home receptionist will earn around $10 to $12 per hour. Additional support staff will likely earn $10 to $15 per hour.
How much profit can a funeral home make?
A funeral home business located in the right area with plenty of senior citizens has the potential to make hundreds of thousands of dollars per year. However, it will likely take several years for the funeral home business to reach this point of profitability.
How can you make your business more profitable?
Additional charges can be applied for cremation services, obituary announcements, graveside funerals and online memorial programs. It is also possible to charge for providing assistance in the procurement of paperwork like burial permits and death certificates.