The fourth generation business beat, among others, Thatcher’s Cider and St Austell Brewery, which have a national presence.
The group, which has eight branches in Dorset and runs the award-winning Dorset Funeral Plan, has expanded by taking over other family funeral businesses and keeping their name, ethos and staff.
Managing director, Nick Douch, said that many of the families that the group had helped over the years were happy to vote, and their community work also prompted many others to support them.
Nick and fellow company director Jonathan Stretch, whose distant relative Albert Marsh founded the Wareham branch, collected the award in London.
Nick said: “To beat some national brands in the people’s award for our region was a great surprise.
“We operate only in Dorset but others nominated are nationwide brands with huge numbers of staff and massive turnovers.
“Our customers really helped us to win, which shows that we’ve provided an excellent service for them.
“We also utilised social media and received great support from people in Dorset, who we’d like to thank.”
Paul Andrews, founder and managing director of Family Business United (FBU) said: “We were delighted to pull together such a vibrant bunch of family businesses for the 2017 awards.
“Some have succeeded for numerous generations and continue to thrive, and others are relatively young but have great values at the heart of what they do.”
Douch Family Funeral Directors are Douch & Small in Wimborne, A E Jolliffe & Son in Ferndown, Albert Marsh in Wareham and Upton, James Smith in Swanage, Ives & Shand in Parkstone and Lesley Shand Funeral Service in Corfe Mullen and Blandford.