A client approached The Fox Group for assistance in completing a senior living market analysis, an invaluable tool and a must-do first step in the development. Whether it is an acquisition of an existing operation or a ground-up project, this kind of undertaking will cost a significant amount of money. For a very small fraction of the overall cost, a senior living market analysis can yield a determination of the viability of the venture.
This analysis can answer the basic question-“can this project be successful?.” Some of our clients are reticent about undertaking a senior living market analysis. Usually, this is due to either the time required or the cost of the analysis. However, such an endeavor must be examined in a much larger context. We all understand the value of an insurance policy. View a senior living market report as such a policy against chasing a bad idea.
Senior Living Market Analysis – A True Story
A client who was re-purposing their site approached The Fox Group to perform a market study on a potential nursing home. The report came back strongly advocating for a skilled nursing facility. It clearly showed that there was an unmet need in the market and that overall, a nursing home would have a high likelihood of success. The client then engaged our firm to formulate a financial feasibility analysis. This analysis covered from the time of opening through the first five years of operation. It included twelve consecutive months of stabilized occupancy. The final result demonstrated a highly profitable operation-one that had a very healthy cash on cash return.
After some considerable discussion, the client made the decision to proceed with the project. The client engaged The Fox Group to work with ownership and the design team to properly layout the physical plant. In addition, The Fox Group worked with the design team and the construction company to complete the skilled nursing facility. Ultimately, the construction was completed on time and within budget parameters. The nursing home opened and the market quickly embraced the project. The facility reached stabilized occupancy quickly and became highly profitable.
Building Out the Senior Living Campus
Shortly after completing the nursing home market analysis, the client requested that The Fox Group conduct a market analysis for both, an assisted living facility and memory care facility. Once again, the resulting report showed strength within the market for both lines of service. As was the case with the nursing home, The Fox Group formulated the financial feasibility analysis. Subsequently, we worked with the design and construction team to build the assisted living and memory care community. It is nearing completion and will open soon. Based on the results of the skilled nursing facility, we expect it will experience similar excellent outcome.
The Value of Peace of Mind
Our client was pragmatic in their development approach. They understood the value of investing time and money into ensuring their ventures would succeed. The senior living market analysis was their first step. From that step, they received “proof of concept” confirmation. That, coupled with the financial feasibility analyses, provided them with assurances that they did not have at the beginning of the process. It gave them valuable peace of mind that they could spend the considerable required capital with reasonable confidence that their returns would justify the expenditures.
Senior Living Market Analysis – The Moral of the Story
Of course, not all senior living market analyses result in a recommendation to move forward with the project. However, as I mentioned previously, it’s much better to take steps to affirm the project’s viability rather than guess. Once our client understood that there was a market for the senior living project, they made the next logical step to proceed with a financial feasibility analysis. Then, with those two steps completed, they were in a much better position to properly evaluate their undertaking and make a logical go or no go decision. Based on the results thus far, their decision to move forward has been an excellent one.
What about you? If you’ve taken the time to find this blog post and read this far, you’re likely considering, somewhat seriously, a similar project. If so, I would urge you to seriously consider conducting a senior living market analysis as the first step in your due diligence process. Once that is completed and assuming a favorable determination, a financial feasibility analysis would be the next logical step in the process.
Finally, a well-conceived and detailed business plan would be in order. Of course, there is a multitude of other factors to consider in this process, such as a design team, funding sources, and consulting assistance.
As the old saying goes, “failing to plan is planning to fail.” Take the time and the effort initially to determine if your concept is a good one. Make a senior living market analysis the first part of your plan.