How to start up a funeral director business

Funeral directors take on the responsibility of organising every element of a person's funeral, including dealing with the relevant authorities. Read our practical guide to starting up and running your own funeral business.

Research your target market

When you plan your funeral business it's important to find out as much as possible about the local community within which you'll be working. It's also essential to find out how well that community is already served by existing funeral directors - and to find out as much as possible about these businesses.

Finding out about your customer base

To help you to set your prices and plan the range of services that you will offer, you should find out as much as possible about the local community. For example:

  • what is the ethnic, cultural and religious background of the local community
  • are local people affluent? What about their social background
  • what, if any, are the local traditions when it comes to funerals

Ideally you will become closely involved with the community that you serve.

Think too about the geographic nature of the surrounding area, your 'catchment area'. Most people choose a funeral director within a few miles of their own home, although in very rural areas distances will increase. Make sure that there are enough people living in your locality to make your business viable, particularly if there are already other existing funeral businesses in the area.

Work for other organisations

You may decide to look into carrying out contract work for organisations such as the local authority and the Coroner's office. These contracts may have to be tendered for competitively but are sometimes awarded annually on a rota basis. You might also develop a business relationship with local private care homes.

If you decide to specialise in a niche area such as embalming you may find that there is demand for your services from other local funeral businesses.

Finding out about your competitors

How well are your potential clients already served by existing businesses? Your most important competitors are other funeral directors within 3-5 miles of your own outlet (say, 10 - 12 miles in rural areas). A browse on Yell.com and other similar online directories will give you an idea of the number of funeral homes in and around your area. You could also look at local print directories. You may be able to find out about your competitors by looking at their advertisements. A visit to their outlets could also be worthwhile. You could also search online for local funeral directors who have a business website.

Make notes about your competitors:

  • do they belong to a trade association
  • are their outlets smart and attractive or shabby and run down
  • where are they located (in a shopping precinct? residential area? close to the town centre?)
  • what services do they offer
  • what are their selling points (for example 'family owned', 'established over 100 years', '24 hour service' and so on)
  • do they display their prices? If so, make a note of them
  • do they advertise a 'basic' funeral? Try to find out what is included, and the price

Look out for branches of multiples such as the Co-op (usually easy to spot, as they display their logo), Funeral Partners and Dignity (sometimes difficult to spot, as they often appear similar to privately owned businesses).

Research current trends, plus legal and tax issues

Decide which services to offer

Think about the range of services your business will offer, including the basic essentials that every funeral director would be expected to provide and any extras.

Burials and cremations

The funerary services that you will carry out will divide broadly between burials and cremations. Cremation is a more popular (and usually cheaper) method of disposal than burial in the UK and the cremations:burials ratio is about 70:30, although this does vary quite a bit regionally.

When you are asked to carry out a funeral you will generally be expected to arrange a package of goods and services, some of which you will provide yourself and some of which will be provided by third parties. The funerary goods and services that you will commonly be expected to provide include:

  • removal of the body
  • preparation of the body (hygienic treatment, cosmetology, embalming) and storage
  • presentation of the body for viewing ('laying out') in a chapel of rest or similar
  • coffin or casket, including coffin 'furniture' (fittings, lining and so on)
  • provision of vehicles (hearse and limousines), drivers and coffin-bearers (pallbearers)
  • officiating at the funeral ceremony
  • other services, for example scattering or interment of ashes, entry into a book of remembrance and so on

As the person in overall charge of the funeral arrangements and proceedings, you will often be expected to attend to the following:

  • dealing with medical authorities, coroner, place of worship, cemetery or crematorium and so on, including settling their fees on behalf of the bereaved
  • arranging press notices, charitable donations and so on
  • organising the provision of flowers, printed material (for example hymn sheets) and catering
  • organising the provision of a headstone or memorial

In the course of organising the above you will incur certain expenses - these are known as 'disbursements' or sometimes 'cash-advance items'. You will normally meet them on the client's behalf and add them to the client's final invoice.

As a professional carrying out an essential service to people at a difficult time in their lives you may be called on to provide a fair amount of emotional support. You're the expert in the situation, so you may be faced with a barrage of questions and requests for help and advice from your clients.

Basic funerals

It is usual to offer a standard low cost funeral option, known as a 'basic' or 'basic simple' funeral. The leading trade associations specify in their codes of practice that members should offer a basic package of goods and services at a budget price, displaying this option clearly to clients. You will need to decide what to include in your basic package, and what will be specifically excluded. If you belong to a trade association this may be set out in the code of practice.

You might decide to tender to provide basic funerals through the local authority's municipal funeral service. You'll probably need to charge considerably less for each funeral you carry out than your standard basic funeral rate. You may also contract with your local authority to provide 'public health funerals', which are very basic and are sometimes referred to as 'paupers' funerals'.

Some funeral directors offer a low cost and straightforward body removal service (sometimes referred to as 'direct cremation') to clients who prefer to do things their own way and just want someone to take care of this essential practicality for them. For a direct cremation the funeral director arranges for the body to be taken to the crematorium and cremated in the days immediately following death. There is no funeral service before the cremation. Those who wish can then organise a memorial service or gathering at a later date. It seems that this type of very basic service is gaining in popularity as people want to have more involvement in funeral proceedings.

Other services

You may be asked to carry out certain other specialist services from time to time, for example repatriation of a body or exhumation. You might also decide to offer other services, which could include:

  • limousine hire (for weddings and other functions)
  • monumental masonry
  • catering

Price your services

It is important to set your fees at the right level. Two key factors to consider when setting your fees are:

  • the amount that you will need to charge to cover all of your operating costs and make an acceptable profit margin
  • the going rate in your area for the type of services that you will be offering

Because you sell both goods and services, you may decide to calculate prices of different items in different ways. For example, you might add on a certain amount to the cost price of items like coffins as your profit margin. You might also decide to add a mark-up to the cost of things like flowers and printed material that you buy on clients' behalf, particularly if you can obtain these at a discount from the normal retail price (although some funeral directors make a point of never making a profit on things like this). You might then base the charges for your services on the amount of time involved, taking into account any other associated costs (for example staff wages, fuel, vehicle maintenance and so on). You may decide to offer certain inclusive funeral packages at a fixed price. These might range from an inexpensive 'basic simple' funeral - or even a straightforward body disposal service - to a top of the range package. It's quite common for funeral directors to price up the goods and services they supply as packages - several different packages are often available at different prices.

Try to find out what other funeral businesses in your area charge for different services. Compare their facilities and quality standards with those that you intend to offer. Find out what is included in their charges - and what isn't.

Pricing is a sensitive issue in the funeral industry. For many years, funeral directors were reluctant to be up front about financial matters, considering this to be inappropriate. However, these days many clients want to feel in control of the cost of a funeral and will expect a clear and fully itemised tariff to be available from the outset. You could consider allowing clients who want some flexibility to choose which elements of the funeral service they want you to provide, making it clear what each element will cost.

Set your prices at a level that members of the local community can afford. Pay particular attention when setting the price of your basic funeral. Also consider the following points when setting your prices:

  • you may encounter cases of financial hardship - will your pricing be flexible?
  • people who are funding a funeral using the social security funeral payment may not be able to afford your standard charges - you will have to decide whether or not to carry out these funerals at a lower rate
  • in some cases it can be very difficult to charge the full price for a funeral (for example if the child of a well liked community member dies). Many funeral directors charge a reduced rate or provide their services free for a child's funeral, charging only for disbursements they have to pay, such as to the cemetery or crematorium.
  • most funeral prepayment plans pay out an agreed lump sum - this will usually be expected to cover the total cost of the funeral and may amount to less that what you would normally charge
  • the local authority, Coroner's office and other similar organisations may expect contract work to be done at a special rate. You might also decide to tender to provide municipal funeral services (which are different from 'public health funerals') on behalf of the local authority - this generally involves providing a basic funeral package at a low price for people who choose to use the service

When quoting a price for a funeral, make it clear and transparent to the client which items are charges for the goods and services that you supply and which are costs that are beyond your control. Try to make an accurate estimate of the total cost of the funeral - this will avoid any unpleasant surprises and possible disputes when you come to submit your final invoice.

Bear in mind that when other associated costs like cremation and burial fees go up, you may come under pressure to keep down your own charges to compensate.

Prepayment plans

A growing number of people prefer to make arrangements for their own funeral before they die. You might decide to cater for these people by selling them a pre-payment plan offered by a specialist company. (Although it's theoretically possible, not many funeral directors offer their own in-house funeral plans any more - regulations mean that it's much easier and safer to use a third party provider.)

Funeral pre-payment schemes are covered by financial services legislation. Trade associations such as the National Association of Funeral Directors (NAFD) and the Society of Allied and Independent Funeral Directors (SAIF) can advise their members about their legal obligations in this respect. A voluntary regulatory body, the Funeral Planning Authority, also exists to regulate plan providers who are exempt from registering with the Financial Conduct Authority (FCA) but nevertheless wish to demonstrate their integrity (currently all of the providers in the market meet the criteria for exemption, but not all are registered with the Funeral Planning Authority - although the great majority are).

There are several different plans available from different providers. Some of these enable you to sell prepayment plans under your own company name. You will normally receive commission from the plan provider for each plan that you sell, while some may also give you a share of any trust fund surplus that arises. When the plan holder dies an agreed amount will be paid out by the provider to the designated funeral director to cover the cost of the funeral. However, there is not necessarily any guarantee that your own business will be chosen as the designated funeral director when the time comes.

As a rough guide you might typically expect around 10% or so of all the funerals you carry out to be covered by prepayment schemes, although this can vary quite a bit from one funeral director to the next. You'll normally receive payment from the plan provider reasonably promptly once you've carried out the funeral.

Buy an existing business

You might decide to buy an existing funeral business rather than start your own venture from scratch. Buying a going concern can mean that the products, customers, staff, premises and equipment are already in place.

Successful funeral businesses can command a high price. There are several large multiples, eg Dignity, that regularly purchase going concerns as a means of expanding their own businesses. So you may well find that you're not the only person interested in acquiring the business you've got your eye on.

But buying a business can be a hazardous, expensive process unless you have the right skills and experience on your team, including legal and financial know-how. Establish the genuine trading and financial position, so that the price you pay for the business is not too high.

Other matters to consider include:

  • are there any outstanding commitments to carry out funerals for people who have paid in advance (not through a formal pre-payment scheme)

 

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