My mum is a funeral director, and there is actually a residential flat above her place! The people living there aren’t employees either, just a regular couple and their small baby. DM and her staff have a lovely relationship with the couple upstairs, always saying hello, etc, and of course, there’s no chance of the baby keeping anybody awake at night! They all seem very satisfied with the arrangement.
They do sometimes have to bring people back in the night sometimes, but it’s not like a regular occurrence, e.g. every single night. Lots of people, of course, pass away in hospital, and go to the morgue there first, so are moved during business hours. Some pass away in care homes or hospices, and family often want to see their loved one first to talk to them or kiss them before they are collected, so, again, would usually wait until morning.
Also, of course, any doctors visiting to certify will be coming during business hours.
And I wouldn’t worry too much about seeing upset mourners and so on. Mum often tells me how it’s amazing how, even in the most tragic of circumstances, people are able to be very practically-minded when they come in to see her. After all, this is usually when they are performing the more “businessy” side of death, so tend to be pre-occupied by making decisions. And, of course, you would never see inside to the chapel of rest, where the mourners are likely to be most emotive. That is, naturally, the most private and secluded part of a funeral director’s and nobody should be able to view it from street level.
(On a side note, one thing I always think is very lovely is that my mum and her colleagues always talk to the people whom they come to collect. Always a kind of, “Hello Mr So-and-so, we are just going to smarten you up a little bit there, dear, now let’s get you up from bed, and so on.” I think it’s nice.)
Also, as PPs have said, it’s not very often that the whole funeral procession starts from the directors at all, rather it’s usually from the family home. My mum always stands outside to watch them off, though, if she’s not attending the funeral herself. She says that she likes to “wish them well”.