Whether you are new to the death care industry or looking to expand your current business, it’s important to understand the requirements to open a funeral home. While the market has traditionally been saturated with family businesses passed down over many years, changes in consumer interests and behaviors have revealed the robust potential for new businesses.
A Cohesive Business Plan
Just like opening any business, you should have a clear business plan in mind before you open a funeral home. Beyond giving you an idea of what to expect, your business plan is also a critical tool for obtaining funding. Lenders want to mitigate risk, so they are more likely to give you a favorable loan if you come prepared with a strong plan that includes:
- Basic information about the business and services
- Who will open a funeral home and work there
- The target customer base
- Revenue projections
- Anticipated start-up and operating costs
Create a Business Entity
Every business needs a business plan and a business entity, so you must form a legal business entity before you open a funeral home. Most funeral homes operate using one of four core structures:
- Sole Proprietorship: This structure combines the business and owner, which gives you all of the profit but also exposes you to all liability.
- Partnership: Partnerships still open you up to potential debt or lawsuits, but it divides the responsibility between multiple people.
- Limited Liability Company: These companies are owned by one or more people but protect your own assets from any liability.
- Corporation: Corporations are another option when you open a funeral home, but they are run by a board of directors and owned by shareholders, which means that most companies evolve into a corporation instead of starting that way.
Come Up with a Name
Unlike restaurants or retail businesses where creativity is appreciated, funeral homes and other death care industry businesses generally have more straightforward names. If you plan on opening a family business, using your last name is perfectly fine.
Even if you open up a funeral home that is relatively small, you will probably need more than six figures of funding. There are numerous different ways to receive funding for your funeral home, including everything from SBA loans to traditional bank loans. Working with an accountant is an excellent way to find the funding that you need and ensure that you are prepared for all tax implications.
Financial Planning for Every Death Care Services Industry Business from MKS&H
MKS&H provides tax and accounting services to businesses of every size and in every industry, including the death care industry. Our team can help your business gain confidence in your important accounting reports and make better, more educated financial decisions. Contact us today for a consultation.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.