What Steps Should I Take to Prepare for Funeral Home Ownership?

What Steps Should I Take to Prepare for Funeral Home Ownership?

Opening and operating a funeral home requires knowledge of and experience in the mortuary field. To work with families at the worst time in their lives, good customer service skills and compassion are a must.
Along with marketing and business expertise, a funeral home owner must also know about different religions’ burial and funeral customs. Here, you’ll learn what to do when preparing to open a funeral home.

Why Open a Funeral Home?

Death is the final stage of our existence. Everyone will require funeral services at some point, but the importance of a good funeral home is often overlooked.
New funeral home owners should understand that the business is mentally and physically challenging. Death keeps operators busy, and there’s little downtime during the average day. Because running a funeral home leaves an operator with less family and personal time, selflessness is an important quality to have.

How Does a Funeral Home Owner Become Licensed?

Most US states require aspiring funeral directors to have mortuary science degrees. In most cases, owners must have a funeral service education degree. Many states also require owners to take a board exam to get a funeral home license, and most also ask owners to serve one-year apprenticeships under licensed funeral directors. Some states require embalmers and funeral directors to participate in continuing education courses.

Naming the Business

There’s a great deal of power in a name, and the funeral home industry is no exception. Consider checking if your chosen name can be purchased as a web domain, and if it is, buy it before someone else claims it.

Finding a Private, Safe Space and Assessing the Cost

As a new owner searches for a place for their funeral home, they should remember to include room for refrigeration, embalming, body preparation and crematory areas. Other necessities are rooms for services and receptions. If there are plans to sell urns and caskets, showroom space is crucial. Some funeral home owners even offer children’s playrooms and meeting rooms for use during wakes and memorials.
In a funeral business’ planning stages, the building itself is one of the most important considerations. Depending on the availability of funds, an owner may choose to buy or lease their space. Leasing is an affordable option for those who can’t afford to offer a sizable down payment on a building. Statistics show that the average lease, not including utilities, for a funeral home is about $5,000 per month. (1)
As a new owner searches for a place for their funeral home, they should remember to include room for refrigeration, embalming, body preparation and crematory areas. Other necessities are rooms for services and receptions. If there are plans to sell urns and caskets, showroom space is crucial. Some funeral home owners even offer children’s playrooms and meeting rooms for use during wakes and memorials.

Hiring Certified, Experienced Staff

Funeral directors handle a variety of activities, including arranging the transportation of the deceased, working with family members, and daily administrative tasks. Those who plan to offer cremation and embalming services should hire experienced team members. A skilled receptionist can greet families and direct them during funeral services, freeing the director to focus on other last-minute jobs.

How Much Do Furnishings and Equipment Cost?

Funeral home operators need a lot of equipment to get started. For instance, an embalming machine is a crucial component that costs about $4,000. A steel body preparation table comes at a similar cost, and you’ll also need embalming supplies, professional cosmetics, caskets and urns. When starting a funeral home, these items may cost upwards of $15,000.

Creating a Price List

The Federal Trade Commission’s Funeral Rule states that owners must create and provide a general price list of the products and services they sell. They must list the prices of individual products and services, such as body transportation, memorial arrangements, and embalming fees. (2)
The Federal Trade Commission also requires the inclusion of certain disclosures, like mentioning that cardboard boxes and other containers may be used during cremation. Finally, owners must tell their customers that they aren’t obligated to buy funeral packages and can choose services individually.

Pre-Arrangements

Many new funeral home owners offer pre-arranged services, which provide the cash flow needed for continued growth. Before selling these packages, though, an owner must review their state’s regulations. For instance, the state of Tennessee requires the owner to register with the Department of Commerce and Insurance Burial Services. It may also be necessary to get lenders’ approval for any pre-need contract.

Planning the Business

As an entrepreneur, a funeral business owner needs a clear plan to ensure success. With proper planning, funeral home directors can outline a company’s specifics and get questions answered. In the sections below, we’ll cover topics such as:
  • Startup and ongoing expenses
  • Defining the funeral home’s target market
  • Setting the break-even point

The Costs of Running a Funeral Home

Funeral homes require equipment for body preparation, embalming and cremation. Tables, hydraulic lifts, refrigerated rooms, computer equipment and filing systems are all necessary. Caskets, clothing and convenience items are also essential. To run a successful business, owners need operating space, parking areas, a labor force and insurance. Viewing areas need furniture, and you’ll need vehicles to transport caskets from the funeral home to the gravesite. These necessities come at a cost, which should be carefully considered beforehand.

Ongoing Expenses

Funeral home operators must pay for labor, utilities, operating space, marketing, equipment and caskets. Like all other machines, embalming equipment has a finite lifespan, and a single machine may cost upwards of $3,000. When the costs of refrigerated storage, embalming tables, hydraulic lifts, embalming fluid, makeup, clothing, caskets and urns are considered, it’s best to set a yearly budget of $5,000 to $10,000 for equipment.
Consider working with a local real estate agent to find a suitable rental property. Depending on the building’s location and size, rent may cost several thousand dollars per month. Set aside a few hundred dollars for each month’s marketing efforts and include utilities such as high-speed internet.
A business manager’s salary ranges from about $35,000 to $65,000 annually. Marketing experts command similar salaries, and accountants can make up to $75,000 each year. Receptionists earn approximately $12 per hour, and support staff is paid similarly.

Do Funeral Homes Need Certain Vehicles?

At the least, a funeral home needs a lead car and a hearse for processions. Because these are business-use vehicles, it may be more affordable to lease than to buy. Leases allow users to trade their vehicles in for new models, which gives the business a professional, updated appearance. Leasing a lead car and a hearse may cost $1,500 per month, but an operator can save money if they already have a suitable lead car.

How Do Funeral Homes Make Money?

Funeral home owners make money by selling flowers, urns, funeral services, embalming, cremation services and other things related to a loved one’s passing. The average funeral costs about $7,000, including embalming, body preparation, viewings, transportation, and professional fees. (3) However, extra services can be sold at a higher cost.

Defining the Funeral Home’s Target Market

As in other areas, the right customer will likely spend top dollar for services a funeral home provides. But the death of a loved one is a trying time, and compassion is a crucial quality. By understanding families’ needs and working within their budgets, funeral home owners can build a loyal client base.

How Profitable Can a Funeral Home Be?

If the target market is well-defined and the location is chosen properly, a funeral home may make hundreds of thousands of dollars each year. Even so, it might take a few years for the business to pass the break-even point and start turning a profit.
Funeral home operators can increase their profits by offering additional services such as obituary announcements, graveside services, online memorials and cremation services. In some cases, it is possible to assess fees for the provision of death certificates, burial permits and other paperwork.
The bereavement services field is a fast-growing one, and it can be rewarding for a compassionate, caring funeral home operator. The average burial costs up to $7,000, which means that it’s possible to make a substantial profit even with high startup costs.

The Importance of Marketing

As with other businesses, marketing is a key cost to consider. To make the community aware of the funeral home’s opening, as well as any available offers, an operator must advertise their business. Most funeral homes have websites, and many buy radio, television and print ads. The average funeral home’s advertising budget may reach $100,000 per year, but it’s easy to cut costs with social media advertising and other creative marketing techniques.

Mistakes to Avoid When Running a Funeral Home

Like all other businesses, it takes experience, dedication, and skill to run a funeral home. Many directors are honest about the slip-ups they’ve had along the way, and wish they’d avoided them.
Here are some of the biggest mistakes to avoid as a funeral home operator:
  • Being unwilling to say no. Though funeral directors are there to help families through some of the toughest times in their lives, the drive to please every customer can be harmful to a growing business. It’s impossible to please everyone, not every demand can be met and budgets must be adhered to. Some funeral home operators find it hard to say no to grieving families, even where finances are concerned. To run a successful funeral home, you’ll have to get used to saying no, because it’s the only viable option in some situations. Don’t cut costs to accommodate families, or the business may not be able to survive.
  • Failing to value your time. Funeral directors that don’t value the time they spend will struggle. Though it’s understandable for an operator to want to respond to every call or inquiry, their time is better spent on other tasks. By hiring a receptionist or outsourcing those duties to a call center, a funeral home owner can understand how important their time is and how it can be effectively used to grow the business.
  • Not networking. Professional networking is a frequently overlooked aspect of funeral home operations. Owners work with many people within the industry, from florists to crematorium operators and embalmers, and these connections can form the foundation of a solid network. Collaborating with companies that are a natural fit for a funeral home will improve service quality, so don’t avoid networking. It makes a significant difference.
Opening a funeral home comes with its share of pitfalls, but the most serious mistakes are preventable. By avoiding these common errors, an operator can reach profitability much sooner.

Contact Us Today if You’re Interested in Operating a Funeral Home

Running a funeral home isn’t for everyone. To be successful, you’ll need focus, dedication, persistence, and above all else, compassion. Once you’ve found the right business idea, it’s only natural to want to take it to the next level. However, there’s more to opening a funeral home than choosing a name and registering with the state. By avoiding mistakes and following the steps outlined in this guide, a new funeral home operator can ensure the continued growth and prosperity of their business.

Contact the experienced team at BSF today to discuss funeral home financing.
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