How to Start a Funeral Home Business

The UK funeral market is overshadowed by corporate groups, but still represents promising revenue thanks to continually-growing demand due to our ageing population.

While two large corporations own a high share of the total market, starting an independent funeral home business in the UK can be a daunting task. Still, it is possible to do with the right planning, preparation and crucially, finance.

Funeral businesses provide emotional and logistical support to families, arranging the funeral proceedings and also taking care of the burial or cremation of the deceased. The sector is estimated to be worth around £2.7bn and has experienced a spike in recent years due to COVID-19. 

Running your own funeral care business allows you to offer something special – with a rise in new alternative funeral services and more affordable burials which appeal to a broad range of UK customers. 

There are a few things to consider before starting your funeral home, such as the location, your competition, the type of services you will offer, and the type of funeral home you want to create. The biggest consideration, however, is the finance behind your venture.

You’ll need to have the capital to fund the business and any potential costs. In the case of funeral director businesses, these are mainly through equipment investment, employee salaries and assembling a fleet of vehicles. 

The majority of potential professional services business owners don’t have that level of capital to hand – instead, needing to raise finance by taking out a credit facility with a lender. However, with lots of confusion around lender types and even loan types, it can be hard to know where to turn. At Rangewell, we act on your behalf to help you navigate the lender’s market and find finance that meets your business goals.

Before you apply for finance, you need to know how to build your venture. This guide will teach you everything you need to know about the UK’s funeral home sector and help you launch a more effective business. 

Becoming a funeral director

If you’re reading this article, you’re likely already experienced in funerary care. If you’re new, however, you’ll need to undergo a training course which is accredited by a recognised body such as the National Association of Funeral Directors (NAFD) or the British Institue of Funeral Directors (BIFD). 

Once established, your home should be recognised by one of these bodies. The Federation of Burial and Cremation Authorities is another option with a higher proportion of representation given over to cremation - representing roughly 94% of all cremation authorities in the UK. 

Assessing the market

Before you start your own business, you need an idea of what’s going on in the existing market. Funeral rates in the UK are rising at around 4.6% per year over the past 13 years. Cremation is more popular than burial, accounting for 74% of burials in 2020. 

The UK funeral care market is worth an estimated £2 billion per year and is growing at a rate of 3-4% annually. The market is highly competitive with many small, independent funeral directors competing against a small number of large national chains.

The average funeral cost in the UK is £3,897, although this can vary significantly depending on the type of service and location. Funeral costs have been rising steadily in recent years, due to inflation and the rising cost of coffin and cremation fees.

Most funerals in the UK are still carried out by traditional means, with the body being transported to the funeral service in a hearse. However, there is an increasing trend for ‘green’ funerals, where the body is cremated without a coffin, or buried in a biodegradable coffin.

There is also an increasing trend for people to pre-plan and pre-pay for their funerals, in order to avoid putting their loved ones under financial strain at an already difficult time.

As a potential business owner, you’ll need to decide if you want to offer pre-payment or other cost-spreading payment plans. While they may be popular, they have implications on your available cashflow so you need to consider the pros and cons. 

Competitors

There are many funeral directors in the United Kingdom, with estimates claiming around 4000 registered businesses. The market is split between independents and large groups, with the more popular names including Dignity, Co-operative Funeralcare, and Golden Charter.

These companies offer various services, including traditional funerals, cremations, and green funerals. They also have a wide network of locations across the UK, making them convenient for those who need to arrange a funeral.

As a new business, you’ll face competition on a local level from either another independent or one of those corporations. You need to assess ways in which you can differentiate your business from their offering, which depends entirely on what type of competitor they are.

For example, offering a more personalised service with unique ‘quirks’ for families might make you stand out next to a more reserved brand like Co-Op. 

Burials vs cremations

As a funeral director, you must decide if you want to offer either burial or cremation services, or both. There is no one answer to this question since funeral directors can offer both burial and cremation services and each has its own advantages. 

Burials are a more traditional service that involves added costs for the customer. They give you an opportunity to provide lots of added value in the form of coffin choice, headstones, funeral cars etc. You’ll need to be a strong organiser with great logistics to organise the service, communicate with the church and ensure customer satisfaction. 

Cremation is a more straightforward service that is cheaper for the customer, but also requires far less investment from your business. In addition, there’s more flexibility in terms of disposing of remains and memorialising the deceased which can be to your commercial advantage. 

Some funeral directors may find that offering both options gives them a competitive edge, while others may focus on one or the other depending on their own preferences and the costs/profits associated with them. 

Business plan

A UK funeral director needs a business plan in order to ensure the financial stability of the business. The funeral director must consider the cost of supplies, staff, and overhead when creating the business plan. The business plan should also include a marketing strategy to attract customers.

To write a business plan for a funeral care company, you will need to include:

• Executive summary

You’ll write your executive summary last, but you’ll place it at the start of the document as it aims to summarise your goals and make it easy for any new reader to get an idea of your overall business idea and financial projections. 

• Locality & competitor plan

You’ll need to include a section that discusses the regional factors that will affect your business. Explore ideas like how many funeral homes are in the area, how you will get noticed above the competition, what transport links, churches or services are nearby etc. 

• Sales and marketing plan

Funerals are in constant demand, but competition means independents have to actively market themselves to stay relevant and win attention from customers. Write down your sales and marketing plan to define how you aim to grow your new brand and win customers. 

• Financial projections

With an accountant or other qualified professional, you should outline all of the financial goals and projections associated with the business. This section is vital to winning lender interest and will be heavily scrutinized, which is why we suggest using an independent financial expert to help you put it together. 

• Employee/management plan

You’ll need a plan for your workforce, including who you’ll hire, seniority of your team, salary structure and more. The company structure is also important – will you be sharing ownership or shares with anyone else? Outline this clearly so that investors know what they are funding. 

A well-written business plan can be the difference between securing finance or failing, especially in situations where your experience as an owner may be lacking. In the case of funeral directors, having a robust business plan that assesses the competition and projects a strong financial future will help you win investment and get your business established. 

Here at Rangewell, we can help you with advice on your application and even your business plan. We arrange finance for funeral directors ranging from small equipment loans to full credit for setting up an entirely new business. Click below to get started. 

Buying an existing funeral director business

Many younger Funeral Directors become owners by taking over existing businesses. This generally occurs as part of a succession plan, but may also happen if you spot an opportunity to approach a competitor or other funeral business on the open market. 

When buying a funeral home business, much of the guidance we’ve already provided is still relevant. You’ll also need a solicitor to help you manage the purchase process, as well as draft the core agreements and contracts. 

While buying a funeral business may seem like a shortcut to ownership, it carries its own risks and financial burdens – especially with regards to employees, who must be protected under TUPE law and will therefore be a liability you must take on. 

To buy a funeral business, speak to Rangewell first. We’ll guide you through the specific finance agreement you’ll need to fund the purchase and help point you to the right sales agent or buying agent to make your dream a reality. 

Building your own funeral home

When you’re setting up from scratch, you’ll need a building which is suitable for a funeral director business. That could mean buying land and constructing the home from scratch, buying an existing home or converting one from another type of building. 

Buying land and building from scratch will generally be the most expensive route, but it may be beneficial if you can spot an area that has a need for a funeral business but lacks one.

You’ll need to secure planning permission to build a funeral home and then secure finance to commence the build. You should also consider the added cost of equipment before you begin, so you’re not left with a finished building that you can’t afford to fit with funeral care facilities. 

Development finance is a must for this process, but it requires its own specific approach. Lenders want to minimise risk and balance it against the profitability of the finished building – so make sure you have a finance expert on your side to identify lenders, negotiate agreements and make the right decisions on your behalf. 

Work with a finance expert to give your business a boost

Whichever route you choose, from buying an existing funeral business to making your own or setting one up from scratch, you’ll need financial support to fund the purchase of premises, equipment, employee salaries and more. To get that finance, you’ll need to browse the lending market and find the providers who offer loans that suit your goals. 

Work with Rangewell, and you’ll gain access to our team of professional service lending experts that can help you navigate this challenging market and find the right lenders. We’ll take you through the entire process and negotiate on your behalf to secure the finance you need to start your business.