It is an unfortunate fact of life that people do pass away, but it is also the key strength for a funeral home business. These businesses are able to generate substantial gross margins not only from death care services relating to embalming, but also from the sales of caskets, urns, and other services that are normally part and parcel of a funeral. These businesses typically have readily available access to capital given that these services are in demand in all economic climates. Even during times of economic recession, the revenues of most funeral homes only decline ever so slightly as people opt for less expensive funeral services. These businesses also enjoy very high barriers to entry is all states require that the individual that owns and operates his business have undergone substantial educational training in order to render the services to the general public. Most funeral home businesses typically have a startup cost of around $500,000-$1 million depending on whether or not real estate is going to be acquired as part of the development.
For weaknesses, the ongoing operating expenses of a funeral home can be rather high. Typically, mortgages carried on the real estate that is acquired to be use as the funeral home facility. These businesses also have high utility costs as well as very high payroll costs as specialized employees must be hired in order to render the services.
As it relates to opportunities, most funeral homes typically expand by establishing additional locations outside of the target market. Most financial institutions are more than happy to provide the necessary capital in order to establish subsequent locations for a funeral home business. These companies can also expand by acquiring other funeral homes are already in operation within the target market.
There are really not too many threats that impact the way that a funeral home operate. While there has been some consolidation within this industry, most people typically prefer to use a locally owned and operated funeral home when a loved one passes away. These businesses are relatively immune from negative changes in the economy. These businesses can be highly lucrative for a qualified owner operator that possesses the necessary licensure to operate as a funeral director.