Your Ultimate Guide: How to Start a Funeral Home Business

Well-operated funeral homes don’t only play an impactful role in the lives of many families – they also play a big role in our economy. Research indicates that the U.S. funeral industry is expected to experience a $28 billion increase in market size by 2025.

Despite the hot debate between cremation and burials nowadays, society’s need for funeral services will never disappear. From 2010 to 2020, The U.S. population increased by 7% (roughly 20 million people). As more families begin to grow and mature, more funeral services are needed along the way.

If you’ve attended many funerals in your life or know someone who runs a funeral home, you’ve probably noticed – while these sacred events are meant to honor the lives of loved ones with dignity and grace, rarely do they go 100% to plan. Plainly put, we’ve all attended a funeral where we question the quality of the funeral services.

Because of those experiences, families are constantly searching for funeral homes that treat every single funeral service with the same level of importance. 

If you’re reading this, you may have similar experiences and are looking to take the matter into your own hands. Interested in learning how to start a funeral home business in your area? Read our quick guide and start making a difference in your community today.

Define Your Mission, Vision, and Values

As a new owner of a funeral home business, you must first identify your core mission, vision, and values when it comes to serving families and celebrating the lives of loved ones.

Oftentimes, it is discussed that there are two central reasons why funeral home businesses have failed in the past: funeral directors communicated poorly with client families, and they also failed to uncover exactly what the client family needed in those intimate moments during the services.

And it doesn’t end there. Several other elements and new client demands (live streaming, personalization, preplanning, cremation, alternative services, green funerals) require funeral homes to be prepared and realize that every single situation is unique.

Before lining out your services, reflect internally and remember what inspired you to start your journey in the funeral services industry in the first place. Remember how sacred and fragile these moments are for families.

From there, create a business plan that solidifies the purpose of your funeral home and outlines how exactly you will bring that purpose to life for your community.

Complete Your New Business Checklist

As everyone knows, there are a few key steps that one must take when trying to start a business. Once you’ve created a business plan, consult the checklist below when learning how to start a funeral home business from the ground up:

Map Out Startup Costs and Business Financing

While startup costs can be intimidating, it’s important to remember the financial upside of running a funeral home. Funeral home businesses typically service around 120 funerals per year, with each of those funerals costing around $7,000 to $10,000 for families. Based on that data, funeral homes generate anywhere from $1.5 million to $2 million in average annual revenue.

Now that you know what cash inflow looks like, let’s talk about what cash outflow factors you should consider. Your funeral home business will require:

• A building or operating site
• A parking lot
• Equipment for cremation and embalming
• Computers
• A website
• Funeral home software
• Printers
• Furniture
• A hearse
• Cold storage
• Labor
• Insurance

Keeping those startup and ongoing costs in mind, you can effectively map out exactly how much financing your business will require to get started.

Finalize Your Funeral Home’s Name and Business Entity Type

Once you feel confident in the startup costs, you will need to create a name for your funeral home. Complete a business entity search within your state to ensure that your name has not already been taken. Once you’ve selected a name, you will then decide on the type of business entity you would like to register as. Small business development consultants will generally recommend LLC formation because of the protection it offers small business owners against liability.

Register Your Business With The State

Once you’ve settled on your business name and entity, you will need to legally register your business with the state to obtain an employer identification number (EIN) and set up your business from a tax standpoint. Every state has a slightly different process, so consult with your state’s website or your state’s small business development center to help get this lined out for you.

Open a Business Credit Card and Bank Account

Whatever you do, make sure you keep your personal and business assets separate. The general rule of thumb for new business owners is to open up a separate bank account and credit card for the business. This will also help with accounting and filing for taxes in the long run as well.

Set Up Accounting and Acquire Business Insurance

Once you’ve successfully registered your business and opened up a business bank account, ensure that you either set up an accounting system or hire an accountant to help manage and oversee bookkeeping for your funeral home business.

Additionally, you will want to make sure that you acquire business insurance to help cover your funeral home against any liability as well.

Obtain Licenses and Permits Required to Run a Funeral Home

There aren’t licenses needed to run a funeral home business. However, some states do hold different license requirements for funeral directors and embalmers specifically, so ensure that your funeral directors and embalmers are properly licensed.

States and OSHA will audit funeral homes regularly to ensure that operations are up to code and are following rules, such as the Funeral Rule.

Some other permits and licenses that funeral homes should obtain include:

• Sales Tax Permit
• Certificate of Occupancy (depending on if you are leasing the building or buying it)

Funeral Service 101: Set Up Your Processes

Once you’ve successfully figured out how to start a funeral home business, you can now begin building out the services you provide to your community and also set up some of your funeral home’s processes:

Process #1: The Services Your Funeral Home Will Provide

There are generally four common services that are provided by most funeral homes:

1. Full-Service Burial 
2. Direct Burial
3. Full-Service Cremation
4. Direct Cremation

With full-service packages, viewings are included where funeral attendees can see loved ones a final time before their loved ones are buried. Oftentimes, the full-service packages are more expensive for families, but it allows for more intimate moments. These packages are generally for services with more exquisite caskets, eulogies, large families, music, and much more.

Direct burials and cremations serve as more cost-friendly options for families and friends who are unable to attend a full funeral service but would still like to honor their loved ones after a death.

Process #2: How You Will Market Your Funeral Home to People

There are several marketing action items that you will need to take to ensure that people in the community are able to find your funeral home. You will need to create a website to showcase your funeral home and the different services you provide. It is also recommended that you create a free Google listing and Yelp listing so that people can find your local business when searching on the internet.

Beyond those two key starting points, you can also market to your community using flyers, local radio and TV advertisements, social media, and above all else, follow up with past customers and clients and see how they’re doing every once in a while. Their word-of-mouth referrals can help bring in more new connections who are interested in your funeral home’s services.

Process #3: How You Will Handle Service Requests

Explore phone systems and decide on a winning system for your funeral home. Make sure that people are able to easily get in touch with your funeral home when inquiring about your services. The quicker that you are able to have someone get in touch with a new client about requested services, the more peace of mind that you’ll be able to provide for that family.

More importantly, families are looking for a genuine, authentic celebration of life for their loved ones. Ensure that you have creative processes in place to help provide a unique and intimate experience for every single family.

For example, say a family has requested particular music, decor, and lighting based on some of their loved one’s personal hobbies and interests. If you are unable to meet their needs for the funeral services based on those elements, the moments won’t be as special and heartfelt.

Set up a process or meeting for every funeral service where your team can review custom service requests from clients and plan the best experiences possible to celebrate their loved ones.

Invest in Funeral Home Software

Imagine you’ve been hired on to a funeral home business that already exists. You ask the funeral director if they are able to pull all of the attendees and activities for a particular funeral that is two weeks out so that you can put together a program.

Instead of having a slick, cloud-based software that visualizes the necessary data for you, the funeral director pulls out a worn-down, red notebook with several pages of chicken scratch handwriting that you are now required to decode. Sounds much more complicated than it needs to be, right?

Businesses in the funeral industry are now turning to funeral home software, also known as funeral home management software. This tool allows funeral homes to streamline client management and provide the best celebration of life possible to every single family.

Experts recommend that business owners who are new to the funeral home industry look into these software solutions. Advanced funeral home software helps funeral homes streamline client management, open up the door to new business, adapt to new client service requests, and provide an easier, more meaningful experience for everyone involved.

Learn How to Start a Funeral Home Business and Provide Better Experiences for Families With Gather

We know how passionate you are about providing the best possible funeral experience to families in your community, and we also know how intimidating it can be to undertake a new business venture.

Gather’s funeral home management software helps provide peace of mind to funeral directors and funeral homes in all areas of the nation by offering case management solutions, funeral home website builds, live streaming solutions, and much more.

Don’t let your families settle for average celebrations of life for their loved ones. Give them the best funeral experience you possibly can.

Learn how to start a funeral home business the right way. Schedule a free demo with Gather today and gain peace of mind knowing your funeral home is set up for continued success.