Funeral Home Business Overview

A funeral home provides end-of-life services and support to families after the death of a loved one. These businesses handle the preparation of the deceased, coordinate memorial services, manage necessary documentation, and offer emotional support to grieving families. Funeral directors work directly with families to arrange services based on religious, cultural, or personal preferences.

The business operates from a physical location that includes preparation rooms, chapels or viewing rooms, and office space. Many funeral homes maintain relationships with local hospitals, hospice facilities, clergy members, and cemeteries to provide complete service coordination. Staff often includes licensed funeral directors, embalmers, and administrative personnel who handle different aspects of funeral arrangements.

The most common business models in the funeral industry include:

• Traditional Full-Service Funeral Home: Offers complete funeral and burial services, including embalming, visitation, ceremony coordination, and merchandise sales
• Cremation-Focused Provider: Specializes in cremation services with optional memorial service planning
• Combination Facility: Operates both a funeral home and crematory on-site
• Green Funeral Provider: Focuses on environmentally conscious burial options and natural preparation methods

Related: Checklist To Start A Business

How Do Funeral Homes Make Money?

Funeral homes generate their primary income through service fees for arranging and conducting funerals, preparing the deceased, and coordinating burial or cremation services. These base services typically include professional staff time, use of facilities, and transportation of the deceased.

Industry Statistics

Funeral homes are classified under NAICS code 812210 – Funeral Homes and Funeral Services, which includes businesses that prepare the deceased for burial, arrange ceremonies, and conduct funerals. Here are some important statistics about the funeral home industry.

Funeral Home Industry Size & Growth: The funeral home industry generates $18.3 billion in annual revenue. Over the past five years, the industry has shown stable performance with 0.1% average annual growth. Projections indicate continued growth of 0.1% through 2029, supported by an aging population and sustained demand for personalized services. (IBISWorld)

Number of Funeral Homes: There are 22,989 funeral homes operating across all regions. Service Corporation International stands as the largest operator, with a market share of 21.4% and annual revenue of $2.19 billion. Most funeral homes are independently owned and operated rather than part of larger corporations or franchises. (IBISWorld)

Funeral Home Profit Margin: Operating profit margins for funeral homes are 12.8% on average. These margins account for standard operating costs, including staff wages, facility maintenance, and equipment expenses. (IRS)

Also See: Ideas for Naming a Funeral Home Business

Costs To Start a Funeral Home

Starting a funeral home typically requires between $500,000 and $2.5 million for initial setup and equipment. This range includes purchasing or leasing a facility, acquiring necessary equipment, and meeting licensing requirements.

There are several expenses involved in opening a funeral home, but here are some of the larger costs to consider:

Building and Renovations: A funeral home facility needs specific rooms for preparation, viewing, and ceremonies. The building must meet local zoning requirements and health regulations. Purchase costs range from $350,000 to $1.5 million, while renovations can add $100,000 to $500,000.

Preparation Room Equipment: Professional preparation equipment includes embalming stations, refrigeration units, and specialized tools. Outfitting a complete preparation room typically costs between $75,000 and $150,000.

Vehicles: A funeral home needs specialized vehicles, including a hearse and service vehicle. New hearses cost between $85,000 and $150,000, while service vehicles range from $40,000 to $75,000.

Initial Merchandise Inventory: Maintaining an inventory of caskets, urns, and other memorial products requires $50,000 to $150,000. This includes display models and a selection of merchandise options for families.

These estimates represent general ranges, and actual costs will vary based on location, facility size, and business scale.

Resources:
American Board of Funeral Service Education
International Cemetery, Cremation and Funeral Association
National Funeral Directors Association
National Funeral Directors & Morticians Association