Diving into the Requirements to Open a Funeral Home

If you’re thinking about opening a funeral home, then you’ve arrived at an exciting time. The funeral industry, once dominated by legacy businesses, is changing in unprecedented ways. A rise in cremations, shift to green burials, and a growing preference for personalized memorial services have contributed to exciting shake-ups in the death care profession. 

That said, it takes more than enthusiasm to get your funeral home up and running successfully. In addition to the basic procedures that come with starting any type of business, you’ll also want to consider the particularities of the death care profession. 

Create a Business Plan

Unless you happen to have hundreds of thousands in the bank, starting your business will require some loans, and for most lenders, you’ll need to supply a business plan. To draft your business plan, you’ll to do the following:

  • Outline your business, where it will operate, and the services it will provide
  • Identify who will manage the funeral home
  • Identify who will be the customer base of your business
  • Explain your goals in terms of revenue
  • Itemize your anticipated expenses, both startup and operating costs

Form a Business Entity

To start any kind of business––funeral or otherwise––you’ll need to form a legal entity. This protects you from being held personally liable in the event of business debts. For funeral homes, the four main types of business entities are:

  • Sole proprietorship: This structure does not legally separate a business from its owner. While this entitles one to 100% of a business’s profit, it also leaves you liable for any debts or lawsuits.
  • Partnership: Like a sole proprietorship, a partnership leaves you liable for any business debts; however, more than one individual shares this type of business.
  • Limited liability company (LLC): Able to be owned by one or more people, an LLC is ideal for funeral home owners as they shield your personal assets from taxation and liability.
  • Corporation: A corporation is a legal entity owned by shareholders and run by a board of directors. For a funeral business that’s just starting out, a corporation likely isn’t an option.

Name Your Business

When you form your business entity, you’ll need to provide a name. While restaurants and Silicon Valley startups benefit from clever, quippy names, with funeral businesses, it’s best to keep it simple. Think of something classic––possibly your last name––that will last for generations. Also, make sure there are no nearby competitors with something similar.

Apply for Business Licenses and Permits

Funeral homes don’t require a specific license; however, embalmers and funeral directors do. Many states also have regulations regarding preneed services, so check with your local agencies to be sure you’re updated on these policies. You’ll also need to contact OSHA to ensure your facilities are up to code.

Additionally, you’ll want to consider general business registrations required by local, state, and federal governments. You’ll likely need a sales tax permit, Employer Identification Number, and an occupancy permit.

Secure Funding

Even small funeral homes come with startup costs well over $100,000. Luckily, there are several different options to fund your small business venture. Before applying for them, get your business plan, permits, and taxes in order. This will make it easier to discuss funding with investors or banks.

Banks, local or national, are a great place to start, as their response can help you identify the level of funding you’ll qualify for. They can provide term loans, lines of credit, or even SBA loans. For those who don’t qualify for banks’ lending criteria, you can turn to the Small Business Administration (SBA) lenders for those who don’t qualify for banks’ lending criteria. Particularly if you’re just starting your business, SBA loans can give you favorable rates. While the application process is rigorous, the payoff is worth it.

Open a Bank Account 

Especially if you start an LLC, you’ll want to open up a dedicated bank account for your business. Again, this will help protect your personal assets in the event of business losses. Along with a business bank account, you should also open a business credit card, one that’s in the business’s name rather than yours. Even if you initially charge few expenses, building up credit in the name of your business can help you obtain better interest rates and higher lines of credit. 

Remember, if you start an LLC, your business takes on an identity separate from your own. And you can’t build up business credit with your personal cards. Having separate credit and banking accounts also makes it easier to perform accounting tasks and files your business’s taxes.

Get Insurance

To cover potential losses and liability claims, you’ll want to look into insurance for your funeral business. Any funeral home will need several different insurance policies:

  • General liability insurance: This protects you if a guest gets injured on your property, potentially covering legal fees and other expenses.
  • Commercial property insurance: This policy will cover any insured equipment, facilities, or inventory in the event of damage.
  • Commercial auto insurance: Much like traditional car insurance, these policies will protect any business-owned vehicles and their drivers.
  • Worker’s compensation insurance: This helps cover costs in the event of an employee getting hurt while on the job or encountering medical expenses.

Create Your Marketing Plan

Since 2009, the number of funeral homes has fallen slowly yet steadily. At the same time, the total yearly deaths are stagnant, making the funeral industry highly competitive. On top of this, many funeral homes have existed for generations, meaning your competition is likely a local institution. To differentiate your business and stand out, you’ll need a solid marketing plan. You’ll want to consider:

  • Developing a useful professional website
  • Crafting outreach content such as emails and social media
  • Offering personalized funeral services
  • Creating an SEO strategy
  • Managing your online reputation and reviews
  • Establishing partnerships with local businesses

Consider Expert Help

The key to any new funeral business is awareness marketing. Before anyone books a service with your funeral home, they’ll need to know that your business exists and why they should trust you. In an industry dominated by legacy players, this is not as easy as it sounds. Luckily, there are outlets like Johnson Consulting Group that specialize in the intricacies of funeral home marketing.

Their expert consultants can help you through every step of the funeral home process, from conception to marketing. Even once your business is up and running, they have tools like their Performance Tracker that allow you to monitor guest experience and continually improve your business’s performance.

Experts at Johnson Consulting Group are the first step to building a legacy funeral home.

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