An actionable nursing home business plan must include many observations. Here are seven most important observations.
The U.S. is currently experiencing a shift in demographics. According to the U.S. Census Bureau, by the year 2034, older adults will outnumber children for the first time in U.S. history. By 2030, the youngest Baby Boomers will be over age 65. This new aging population will create more of a demand than ever for facilities that care for the elderly population.
If you’re considering getting involved in a nursing home business, the first step you need to follow, after conducting a market feasibility study, is to create your nursing home business plan. A well written and comprehensive business plan will not only help you focus on your vision for your business, but it will show investors that you’re committed to succeeding.
The nursing home business is a unique market, and success in this field often requires a complete understanding of its many challenges. A business plan will help you convince financial institutions that you’re well versed in the industry and have a clear picture of what you need to accomplish.
Challenges in starting a nursing home business
Operating nursing home care facilities can be challenging in today’s market due to increased costs of higher acuity patient care, staffing shortages, reimbursement concerns, increased at-home healthcare, policy challenges, and liability issues.
This is why it’s crucial to guarantee your business plan is thorough and well-researched. You’ll want to complete it before embarking on your new venture or attempting to procure funding. A properly formulated plan will not only convince lenders that you’re a profitable investment but will also help you hone your vision for your nursing home.
Keep in mind that this is a brief overview of the many facets of information you’ll need to provide for your nursing home business plan. The nursing home business can be complicated, with a lot of information to cover.
Your business plan will also help you focus your vision and can provide prospective employees with an overview of your new business.
The plan should contain seven main categories: (1) the executive summary, (2) a company summary, (3) the customer plan, (4) a market analysis, (5) a strategy for implementation, (6) selection of a management team and (7) financial planning.
Nursing Home Business Plan – 7 Key Points
(1) Executive summary
The purpose of the executive summary is to give readers a brief description of your business. It must be well written with correct grammar. You want to draw your readers in and give them a brief synopsis of what your nursing home business plan is all about. Keep it simple and make it engaging.
It may be the first part of your business plan, but it helps to write it last. Once you’ve covered all of the other details, it will be easier to write up a quick introduction.
The executive summary should contain the following information:
- Your business name and location.
- Your business’s legal structure. Will it be a sole proprietorship, a limited liability company or a partnership?
- Your customers and the services you’ll offer. Who is your target market? What age demographic are you planning to serve? Are you considering any niche services?
- Your mission statement. A mission statement doesn’t need to be longer than one or two sentences. It should describe what your nursing home business will do and convey why someone should choose your business over another.
(2) Company summary
In a company summary, you should state who you are, how you will operate your business and what your goals are. Your company summary should include the following:
- Motivation. Why are you starting this business?
- Housing plans. Are you planning on new construction? Or will you renovate an existing building to house your nursing home? How many rooms will there be?
- Profit goals. Provide a brief summary of your overall goals and how you plan to turn a profit.
(3) Customer plan
Next, your customer plan should be a clear description of the service you’ll offer that emphasizes the benefits to your patients. You may include some of the following services:
- Specialty care. What care will you offer your patients? Does it require specialized staffing and if so, what kind of staffing?
- Rehabilitation services. Will you offer short term care for patients who need care until they are ready to return home? Will you offer occupational therapy, speech therapy, and physical therapy?
- Other activities. Do you provide ancillary services such as home health, home care or hospice? Will you participate in an accountable care organization or run an I-SNP program?
(4) Market analysis
The market analysis is the section where you get to illustrate your knowledge of the industry and highlight your thorough research. This section should include the following:
- Market area. Identify your primary and secondary market areas. This will be key as you look to analyze demographics, competitors and demand.
- Market demographics. Who is your target demographic? What does the elderly population look like in your area? What are the size and demographics of each of your target groups? What do the future demographic trends look like in your area?
- Overview of competitors. Evaluate other nursing homes in your market area. Analyze their strengths and weaknesses. Which businesses would be your top competitors? How will you distinguish your business from theirs?
- Demand analysis. Demonstrate the need for your project. You should use several methods to calculate and show demand.
(5) Strategy for implementation
In the next section, you need to summarize your sales strategy and describe your plans for implementation.
- How will you promote your business? What is your marketing plan? Do you understand who your key referral sources will be? How will you distinguish your facility from the competition?
- Census building. What is your plan for building census? How will you ensure that you stay on plan? Make sure you differentiate between the payor classes in your analysis and plan.
- Labor information. How many employees do you plan to hire? How many registered nurses, administrative staff, aides, dieticians, etc. will you need? Where will you find your sources of labor? Recruiting for healthcare staffing presents unique challenges.
- Medicare and Medicaid certifications. Nursing facilities must obtain licenses with the state to receive payment from Medicare and Medicaid. You will need to show that you are compliant with 42 CFR Part 483, Subpart B.
(6) Management team
You’ll need to include a section detailing your business’s organizational team. The following categories are relevant:
- Organizational chart. Describe the departments, key employees and their relevant experience.
- Owner information. Provide detail regarding the owner of the nursing home. What is his/her background? Do they own other companies? What experience do they have with senior care and nursing home businesses?
- Profiles of your management team. Provide their names, work experience, and main job duties.
- Any advisers. These may be consultants, attorneys, or accountants.
(7) Financial plan
Your financial plan is the final section of your business plan. You will not be able to complete this section until you’ve finished your market analysis and set your goals. This plan must include predicted operating expenses and projected profits. You may need to include the following financial statements:
- Your historical financial data. Have you owned a prior business? If so, you’ll need to include your income statements for the past several years.
- Forecasted income statements. What is your predicted income for this business? Provide your budget and cash flow estimates for the next three to five years. You should make sure that these estimates cover the fill up period, as well as the first twelve consecutive months of stabilized occupancy.
- Organizational budgets. What do your overall monthly and yearly budgets for the business look like? Some examples of important information could include personnel salaries, rent or mortgage, equipment costs, insurance, payroll taxes, and marketing expenses. Include any supporting schedules that provide additional details on how you arrived at your operating expenses.
Do you need help creating your nursing home business plan? Experts can help you dive into each of these categories to create a comprehensive plan. Review some sample consulting engagements in nursing homes and assisted living to get started.