How to Write an Assisted Living Business Plan
Competitors in the assisted living industry have been enjoying a moderate amount of revenue growth over the last several years, which has in turn driven the demand for assisted living business plans, assisted living business plan templates, and assisted living pro forma financial projections.
There are numerous reasons for the elevated demand for assisted living facilities as well as assisted living business plans. For example, in the last several years, more assisted living facilities have been opening up locations in subdivisions by remodeling homes and leasing out each room. This business model has allowed competitors to start businesses with relatively little capital and short buildout times.
No matter why or which reason or reasons are spurring the demand for assisted living business plans, the fact of the matter is that business owners in this industry are better off with a plan, strategically, as compared to without. From this, our assisted living business plan writer has come up with some tips and tricks for business owners to use when writing their own assisted living business plan, business plan template, and or pro forma financial projections (1/22).
Executive Summary for an Assisted Living Business Plan.
In the executive summary section of the assisted living business plan, make sure to discuss what type of legal business your organization will embrace. Popular selections are non-profit, corporation, and limited liability companies. Each structure offers benefits and challenges for an assisted living facility. For example, a nonprofit business will enable founders, in most instances, to avoid paying federal taxes on excess funds received by the organization. Further, this type of structure is inherently set up, in our business plan writer’s opinion, to receive donations from community members. This additional revenue source cannot only ensure continued flows of revenues into the nonprofit company but also helps community members achieve their corporate social responsibility objectives through donating to charitable organizations. However, there are some downfalls to a nonprofit structure, like business founders may receive salaries for work completed but they are not eligible to withdraw profits from the organization as dividends. From this, make sure to work with an attorney to select the best legal structure and document the selection briefly in the executive summary segment of your business plan (10/21).
Company Information for an Assisted Living Business Plan.
In the assisted living business plan’s company information section, business plan writers should touch on important characteristics of the organization, such as the company’s name, location, and specific types of services provided. Further, the writer should expand upon, in detail, the firm’s amenities provided to their residents. In some instances, our assisted living business plan writer has found that popular amenities for these types of businesses may include gardening activities, weekly shopping trips, furnished rooms, and Internet access. Further, some assisted living facilities even offer transportation for doctor visits as well as state-of-the-art security. Regardless of what your assisted living facilities' amenities are, make sure to provide sufficient details in the company information section of the business plan (2/22).
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Product Description for an Assisted Living Business Plan.
Assisted living businesses generate revenues from individuals living at their locations. Oftentimes, these locations will house up to five or six individuals plus a certified nursing assistant. Since the revenues are focused on monthly payments, the product description section for an assisted living business plan should focus on the daily activities offered by the business and then the amenities the location will provide.
Competitive Advantages for an Assisted Living Business Plan.
The assisted living industry has been growing substantially over the last several years thanks to baby boomers' aging. Because of the high competition in the assisted living industry, new businesses and trends should take time and create specific competitive advantages that may lessen their business plan. For example, a common competitive advantage for assisted living facilities may include transportation. The transportation may take guests to the malls weekly, doctors' appointments, or even trips to the beach. Just by having transportation services available, assisted living facilities may adequately differentiate themselves.
Location Description for an Assisted Living Business Plan
The location of a new assisted living facility is critical for the success of the business. For the interior of the business, adequate square footage is absolutely needed. As noted above, assisted living facilities often house 5 to 6 people plus a certified nurse. This does not include amenities like a porch, garage for storage, kitchen, and an adequate number of bathrooms. For the most part, the interior of the facility should be at a minimum of 2,500 to 3,000 ft.². Of course, the business owner may choose to go smaller the house with fewer individuals or even a larger the house. Regardless, make sure to adequately address the size needs of the business in this section.
As for the general location of the assisted living facility, our business plan writer has found that these types of businesses do well in locations near community amenities like pools, malls, and healthcare. Further, placing an assisted living facility near subdivisions, ensures that visitors are near their loved ones in case of emergencies.
Target Market for an Assisted Living Business Plan.
A common misconception about an assisted living target market is that the actual target market is the elderly. And only the elderly. This is just not the case. The actual target market would also include the loved ones of the elderly or disabled. By including the loved ones in the target market mix, assisted living business owners can design marketing plans to ensure their facility appeals to their target gas and also their family members. This will ensure an easier time making a decision to select your assisted living location.
A second target market for assisted living businesses may be community governments or state governments. In some instances, the elderly or disabled become wards of the state. When this happens, facilities need to be found to care for the individuals. By including state and local governments as target markets, assisted living businesses are able to expand their services to include a wide population of potential residents while securing a consistent cash flow from the state or community for services rendered (12/21).
Industry research for an Assisted Living Business Plan
Because this is a new industry, reliable research on the assisted living industry is scarce. Based on quick research, the main industry in which assisted living competitors to compete is the nursing care facility. The nursing care facility generates approximately $145 billion in revenues annually. In the last five years, the nursing care facility industry grew by about 2% annually. Over the next five years, this growth estimate is projected to increase substantially to about 5%. As of right now, about 23,000 businesses are competing in the nursing care industry, which includes assisted living facilities. However, over the next several years, this number is expected to grow substantially.
Owner and Management Section of an Assisted Living Business Plan
Owning and managing an assisted living business is quite different from other organizations. This is because owners often require substantial education to receive licenses. From this, make sure to include in your business plan a resume. On your resume, make sure to highlight all of your educational attributes and skills that correlate with the assisted living facility. Also, any type of management skills would be highly regarded in this industry as well. On a final note, make sure to include your resume in the appendix section and summarize your skills and expertise in the owner and management section of an assisted living business plan.
Funding Request for an Assisted Living Business Plan
Starting an assisted living business is actually quite expensive. Business owners need to acquire a property, provide furnishing, and then build amenities that will appeal to their customers. From this, a typical starting cost for an assisted living business range from $250,000 to approximately $500,000. Since this number is quite substantial, funding from banks or investors is often required. A starting point for the funding process is almost always having a professionally prepared assisted living business plan.
Financials for an Assisted Living Business Plan.
Financial projections and financial models for an assisted living business plan should first start with identifying how many monthly revenues will be received by the organization. This is calculated by multiplying your monthly fee for each guest by the number of guests your organization will house. Next, add in any additional revenues that your assisted living company may receive like transportation fees or additional meal charges. Once this is done, your financial model for the assisted living company should then align fixed costs with your revenues. The fixed costs may include rent or mortgage payments, utilities, and even your transportation vehicle payments and maintenance. Once this is complete, you then have your net income monthly for the assisted living facility.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author