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The funeral market has experienced solid and stable economic growth over the years and has quickly recovered in times of crisis. It is therefore not unreasonable to consider how to start a funeral home and what the requirements are. We have already told you that the initial investment is high, but in the long term and with proper management, you can be the owner of a business with a 20% gross profit margin.
How to start a funeral home: starting point
The first thing you need to know about starting a funeral home is how the funeral market works in your country. It is important to know the economic outlook for the coming years and who your main competition will be, from the large groups to the smaller funeral homes operating near the location you have chosen to open your new funeral home. Analyse all the information gathered with the help of a SWOT to compare strengths, weaknesses, opportunities and threats. This step is extremely important to assess the risk of the initial investment.
Consider the option of finding a partner who, in addition to providing capital, will also contribute with financial or funeral knowledge that you do not fully control. But above all, when considering how to start a successful and long-lasting funeral home, you should look for someone you trust, who shares your goals and your vision of the funeral business.
Create a business plan in which you define perfectly what your funeral home is going to be like, what infrastructure you need, how you are going to organise the work, how many staff you need and what services you are going to offer. Remember that customers tend to opt for funeral homes that offer comprehensive management of all funeral and cremation/burial arrangements.
- Here are some of the services you should consider:
- Preservation of the deceased
- Funeral transport
- Sale of coffins and urns
- Thanatopraxy and thanatoaesthetics
- Cremation service
- Sale of flowers, wreaths and other ornamental arrangements
- Handling of legal and administrative formalities
- Wake service
It is highly recommended to include what image you want to give to the rest of the world and a small preview of your marketing plan in your business plan. Remember that you should also add the initial investment required for the business and the possible costs of personnel, supplies and services. In this way you can determine the economic viability of the project and the approximate fees you will have to establish for your funeral services.
Once you have made your business plan, it will be easy to determine if you need to apply for financing. Remember that there are many ways to obtain capital, the most common is to ask for a loan from a bank, but you can also turn to a private investor (business angels), microcredits, organise a crowdfunding and/or turn to state aid and subsidies for new entrepreneurs. The most advisable thing to do is to go to a manager who can help you find the most suitable financing model for your funeral home.
Now that you know how to start a funeral home, or at least what initial steps you should take, it is time to pay attention to the requirements.
Requirements to open a funeral home
The legal requirements to start a funeral home vary from country to country, so it is extremely important to be aware of the different regulations you will have to comply with if you do not want the authorities to fine you or even order the closure of your funeral home.
Requirements to open a funeral home in the US
There is no national law that sets out the requirements for how to start a funeral home in the United States. Each state has its own regulations and requirements for obtaining a business operating licence and a licence to practice as a funeral director and embalmer. Many states require a pre-examination and even require professionals to attend training courses in order to renew their licence.
Be aware that some states such as Pennsylvania, Maryland or Massachusetts do not allow the opening of a new funeral business owned by several partners unless a licensed funeral director owns more than 50% of the partnership and assumes management of the business.
As in Spain and Mexico, there are consumer protection laws for correct information on services and fees, rules regulating sanitary spaces and access to funeral facilities and, of course, laws related to occupational health and risk prevention, which in the United States are included in the Occupational Safety and Health Act.
Requirements to open a funeral home in Spain
If you are wondering how to start a funeral home in Spain, you must take into account the Mortuary Health Police Regulations (which include the regulations relating to the transport of corpses), the General Health Law, the different decrees, circulars and orders of the different regional health departments. Strictly speaking in terms of commercial activity, all businesses must comply with the Consumer Law and the Law on the Guarantee of Market Unity.
On the occasion of the pandemic caused by covid-19, the Ministry of Health has also approved several technical documents indicating the procedures to be followed by funeral companies, in addition to the guidelines for good practice in the Funeral Services Sector of the National Institute for Health and Safety at Work. Remember that these standards are constantly being revised and may be updated depending on the epidemiological situation.
Before starting to operate, you will also need several local and regional authorisations that are essential to start a funeral parlour:
- Authorisation from the municipality where the funeral home is to be located, which in most cases requires another authorisation consisting of a favourable assessment of a mandatory report from the regional health authority.
- Authorisation for private transport by the regional transport authority. Without this authorisation, corpses cannot be transported.
How to start a funeral home in Mexico: requirements
In Mexico, the two most important laws you must take into account when opening a funeral home are the General Health Law, which establishes that funeral homes must have a notice of operation in order to be able to offer their services. And secondly, the Official Mexican Standard NOM-036-SCFI-2016 on commercial practices of funeral services, which among other requirements, establishes that funeral service providers are obliged to register their adhesion contracts with Profeco (Federal Consumer Protection Agency) in which the provider’s details, service hours, price and detailed description of the goods and/or services must clearly appear.
Another law to keep in mind among the requirements to open a funeral home in Mexico is the Commercial Practices and Information Requirements in the Commercialisation of Funeral Services. This law regulates the preliminary information and advertising requirements for funeral services, the rights of consumers and the main obligations of funeral service providers.
Remember that, as part of the legal formalities, you must also obtain a health and land use permission, among others. In addition, due to covid-19, funeral homes are obliged to comply with the Regulations of the General Health Law on sanitary control for burial or cremation.
How much does it cost to open a funeral home?
The funeral sector is a market with slow but steady growth and guaranteed demand due to the progressive ageing of the population in developed countries. This means that, as a general rule, it is a sector that provides profits over time. However, it requires a large initial investment, which is why many entrepreneurs are put off the idea of opening a funeral home.
“Approximately 80% of the money will go towards the construction and fitting out of the facilities, and the purchase of the land.”
The initial investment depends on the facilities, the funeral services you are going to offer and the size of the population you plan to serve. The largest amount of money, approximately 80%, will go towards the construction and fitting out of the funeral facilities themselves, as well as the purchase of the land.
Are funeral homes profitable?
Within the initial budget, you will need to allocate an item for the purchase of the fleet of vehicles, at least three for a population of 10,000 inhabitants. Bear in mind that a hearse costs between 80,000 and 85,000 euros.
Other important expenses are those associated with the recruitment of personnel. And don’t forget the price of the business licence, which can be around 2,500 euros on average in Spain and depends on the fees paid at the town hall and the technical project that the town hall requests in order to process the licence.
If the business plan is successful and the management of the funeral home is adequate, over time the owner of a funeral home can obtain a gross profit margin (before taxes) of approximately 20%, depending on the overall economic conditions.
