Do you want to start nursing home business?
Do you want to start a nursing home business? Well, it may prove the right choice if you want to serve people besides earning money. A nursing home is like a residential care center for elderly people who can’t be cared at home and are too healthy to be admitted to a hospital. Due to the advancements in medical science, life expectancy has been increased, especially in the developed countries. So, the elderly people who don’t have any caretakers at home or who choose not to live independently needs a timeless service in which they are provided with mental, medical, occupational, speech and physical assistance.
If you are determined to help the retired and elderly people and also want to generate a surplus amount of money, then this is the most suitable profession for you. Before you start the nursing home business, the first step is to make its comprehensive business plan, in which you include all the details about how to open a retirement home and how will you manage it etc. In case, you don’t know how to start a home nursing care business, you can take help from this sample business plan written for a nursing home business startup named ‘Kate Nursing Home’ owned by Kate Greene.
2.1 The Business
Kate Nursing Home owned by Kate Greene, will be a home to elderly people who need daily assistance and care, located at a 5 minutes’ drive from DMC Heart Hospital, Detroit. Kate Nursing Home will be a 3-floored vast building with the capacity to accommodate about 35 people.
Opening a nursing home is not just a business, it is a task of great responsibility and accountability. The owner of the business will be responsible for routine works of about 35 people. The whole system will be managed by Kate, her daughter and a hired manager. Moreover, Kate will hire recreational staff to meet social, emotional, intellectual and spiritual needs of elderly people, skilled nurses, nursing assistants, accountants, housekeepers, therapists and guards.
Before starting a nursing home business, you must acknowledge the type of your customers to plan your business according to their demands and needs. The customers of a nursing home will be usually the people living in Detroit of age 60 or above. You have to use all means to provide proper care and attention to the residents of your nursing home.
2.4 Target of the Company
Our target is to fill out all our rooms within the two or three months of our launch. We aim at providing excellent temporary and permanent caring services to the elderly people of our town, and to make them feel at home. Our major purpose is to provide the elderly people of our home with comfortable and friendly environment. Besides, we also have some monetary targets; the fundamental one will be to balance the cost of startup within the next three years of launch.
Our sales and revenue targets for the next three years are summarized in the chart below:
3.1 Company Owner
Kate Greene will be the owner of Kate Nursing Home. Kate had been awarded an MD (Doctor of Medicine) degree by the University of Michigan. She had been working in the DMC Heart Hospital for the past 20 years. Now, she has taken retirement because she wants to open a nursing home. She will work on her nursing business plan ideas, with the assistance of her daughter, who is also a doctor, and an experienced and caring team.
3.2 Why the Business is being started
Kate was interested in serving and helping people since her childhood. She didn’t become a doctor for the sake of salary, but for improving the life qualities for others. Now she had enough money and time to open up a nursing home for the people who need assistance with their daily routine, but don’t have anyone at home to pay attention to them and their needs.
3.3 How the Business will be started
Starting a nursing business requires a lot of effort, time and money. If you don’t just want to open a nursing home but also want to run it successfully benefitting more and more people, you have to put loads of effort into it.
Kate has decided to procure an existing building and turn it into a nursing home. She will rent a large building with 3 floors, at least 8 private rooms with attached baths, and 20 general bedrooms. Each floor will have five bathrooms, a kitchen, and a big sitting lounge. There will be a lawn with walking and running tracks and a therapy gym with basic equipment and machines. Each room will be well-furnished and every comfort will be provided to the residents. Kate will hire a team of housekeepers, nurses, assistants and therapists for the 24-hour assistance of the residents.
If you want to jump into this business but don’t have an idea of how to start a retirement home, we are here to help you by this sample business plan.
The costs for startup are as follows:
The startup requirements are as follows:
|Research and Development||$32,750|
|TOTAL START-UP EXPENSES||$187,300|
|Other Current Assets||$232,500|
|Start-up Expenses to Fund||$11,875|
|Start-up Assets to Fund||$15,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$18,750|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$18,750|
|Cash Balance on Starting Date||$21,875|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$695,000|
|Loss at Start-up (Start-up Expenses)||$313,125|
|TOTAL CAPITAL AND LIABILITIES||$251,875|
Services for customers
After getting the basic knowledge about how to open nursing home business, the next step is to add the services, you are going to provide, in your nursing agency business plan. Your services will decide whether you will be able to compete in the market or not.
If you want guideline on the services you should provide, you can take help from this sample business plan on how to start up a nursing home and run it successfully. Kate Nursing Home will provide the following services:
- Specialty Care: For the disabled persons who need acute care and attention, we have licensed nurses and nursing assistants who will provide them with daily assistance and personal care by serving meals, taking care of their medicinal needs, transferring them from bed to chair etc. Besides, our skilled nurses will make a daily nutrition plan for them, to assist them in improving their health.
- Temporary Assistance (of 2 months): This type of assistance will be given to your loved ones if they are ill and need proper care and therapy until they are fit and healthy again. Usually, the temporary residents of a nursing home are fighting with some physical, mental or emotional disorder. For them we’ll provide three types of therapies:
- Occupational Therapy to assist residents in fighting with some illness or injury.
- Physical Therapy for assisting them to regain their strength and flexibility.
- Speech Therapy given to the persons who have trouble producing and evaluating speech.
- Permanent Assistance: We’ll assist our permanent residents by taking care of all their needs and requirements including physical, mental and emotional needs. Elderly people usually get emotional and behavioral sickness. So, we will hire a recreational staff for arranging birthday parties, musical events, religious services, art and crafts, adopting pets, outdoor activities and picnics for them to refresh their moods.
- Evening Activities: For the people above age 60, whether they are our residents or not, we’ll arrange evening activities like playing cards or chess or learning the use of technology, to assist them in maintaining their intellect and memory.
Marketing Analysis of nursing home business
If you are going to start a nursing home business , then you surely need to make a nursing home business plan. While designing your nursing home business plan template, you must focus on the marketing analysis segment. The accuracy of your nursing business plan depends upon how keenly you focus on your target market and analyze it in your personal care home business plan.
If you are finding difficulty at writing residential care home business plan, you will be glad to know that we are providing a nursing home business plan free of cost. You can take help from this sample personal care home business plan or can also find more nursing home business plans available online. However, if you are starting this business on a very large scale then instead of writing a plan by yourself by taking help from a sample business plan personal care home, you should hire services of experts to make for you an accurate personal home care business plan according to your dimensions and finances.
5.1 Marketing Trends
Before starting a new business, you must study the marketing trends in detail to help you demonstrate the market potential of a new startup. A careful marketing analysis will help you to decide the most favorable location for your business. According to a report by IBISWorld, there are more than 31,000 nursing home businesses in the United States running successfully. The business is expanding at a rate of 2.3% and is expected to continue expanding at a much faster rate over the coming years. Because an estimate shows that 22% of the world population in 2050 will be comprised of the people of age above 60. The business is generating a revenue of $136 billion annually and is serving as a source of employment for more than 1.8 million people in the United States. These statistics clearly demonstrate that this is the good time to enter in this industry, and the business can prove extremely profitable for you if you plan it wisely and successfully.
5.2 Marketing Segmentation
While writing a business plan, you must clearly acknowledge the groups or segments of the society that can prove your prospective or potential customers. An accurate marketing segmentation can help you in devising your policies according to the demand of your customers. Our customers will include the non-acutely ill or companionless people of age 60 or above living in Detroit, or the one who has some disability and need 2-3 months of full-time rest and proper care. We will also be serving the people, whose family may be going to somewhere else for a short period of time and need a trusted care center for their loved ones. We also have arranged evening activities for the people who want some recreational and intellectual activity for themselves. Evening Activities will be available for the temporary and permanent residents of the nursing home as well as non-residents. Our experts have identified the following target groups for our services:
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Elderly & Alone People: The first group of our customers will be the elderly people, who don’t have a family or any caretaker at home, who want to spend time in productive and recreational activities and can afford the charges of full-time assistance at a nursing home. Such elderly people can prove our permanent residents and we’ll provide them with our best services fulfilling all their nutritional, medical and recreational needs.
5.2.2 Disabled or Diseased: The second category includes the people who have some serious disorder or disease, and whose loved ones want them to be in a homey environment rather than a hospital. Such people need daily therapies to enhance their workability, besides the routine assistance. For such residents, Kate Nursing Home has hired experienced nurses and therapist who will make sure that the residents are given occupational, speech and physical therapies according to their needs. They will mostly be kept in specialty care or under temporary assistance.
5.2.3 Non-acutely Ill: The people whom we cannot declare as healthy, and who are not much seriously ill to be cared in a hospital will be our third and the biggest target group. Our honest and hard-working professionals will ensure that the best possible care is being delivered for such permanent residents. We will ensure that our caring and compassionate staff will treat the residents as their family. We’ll ensure extra care and attention along with the daily routine assistance to this category of our residents.
The detailed and comprehensive market analysis of our potential customers is given in the following table:
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|Elderly & Alone People||32%||11,433||13,344||16,553||18,745||20,545||13.43%|
|Disabled or Diseased||48%||22,334||32,344||43,665||52,544||66,432||10.00%|
5.3 Business Target
Kate is not opening the nursing home just for the sake of money, but because she has the passion to serve humanity by helping the helpless. Our major target will be to provide a homey and comfortable environment for the elderly and disabled old people. We’ll hire the persons who are skilled, ethical, compassionate and ready to treat our residents as their own family members. Our target is to provide them with the care and assistance they need and deserve in this old age. For the sake of giving proper attention to our residents, we are not going to accommodate hundreds of people in our nursing home, instead, we will accommodate a maximum of 35 people and will comfort them with our best efforts and services.
To serve more and more elderly people efficiently, we have to make our business financially strong. For that monetary advancements, our business targets are:
- To become the most trusted and most successful nursing home in Detroit
- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- To balance the initial cost of the startup with earned profits by the end of the first year
5.4 Product Pricing
Product Pricing is the major leading factor in deciding the success and failure of a startup. If you are starting a new business, you have to keep your prices low at the initial stage, so that more and more people are attracted towards you. In this sample business plan, we are giving the product pricing scheme of Kate Nursing Home.
We haven’t priced our services very highly; we have the rates which are currently offered by other nursing homes in the city. However, we haven’t compromised on the quality of our business. All the inventory and things which our residents will need for daily usage will be available every time, and the rooms and furniture will be maintained on a daily basis.
Basically, we’ll have these three types of memberships:
- Membership for Permanent Residence for $600 per month
- Membership for Specialty care for $800 per month
- Membership for Temporary Residence for $400 per month
- Membership for Evening Activities for $150 per month
These are the charges for general accommodation, if you want a private and more comfortable room for your loved ones or for yourself, you have to pay additional charges for it. Moreover, for the people who need intense professional therapy, we’ll be taking a little bit more money to meet their medicinal needs.
If you are working on how to start a nursing home business, the most important part you should consider is your sales strategy in the business plan. Kate has done a lot of research on the sales, marketing, and advertisement techniques, so that more and more people will know about the new startup and can use the services of Kate Nursing Home either for themselves if they are above 60; or for their parents if they are unable to give them proper time or care.
Here is starting a nursing home business plan, which we have provided in order to help you in formulating yours.
6.1 Competitive Analysis
Our biggest competitive advantage is the devotion and determination of all our team. We have an excellent team which believe in serving the people who are unable to serve themselves. Our second biggest competitive advantage is the range of indoor and outdoor services we will provide to our residents. No other nursing home in this vicinity arrange the hobbies and activities for old people like adopting pets, playing games etc. Most significantly, we will teach our permanent residents to use latest social networks and websites so that they will conceive that they are not outdated and can compete with the new generation. Lastly, we have a wide parking area for the vehicles of the visitors whenever they visit their loved ones.
6.2 Sales Strategy
We will attract our customers towards us by various efforts, such as:
- We will advertise our nursing home in magazines, newspapers and social media
- We will arrange seminars and awareness sessions on giving the elders the required care and attention
- We will arrange transportation facilities with caretakers for our residents when they want to go out
- We will give 5% discount to the first 10 customers
6.3 Sales Forecast
Our sales are forecasted in the following column charts:
The detailed information about sales forecast is given in the following table:
|Unit Sales||Year 1||Year 2||Year 3|
|TOTAL UNIT SALES||3,494,170||4,588,370||4,807,410|
|Unit Prices||Year 1||Year 2||Year 3|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Direct Cost of Sales|
|Subtotal Direct Cost of Sales||$1,294,100||$1,699,400||$2,104,700|
6.4 Sales Monthly
Our forecasted monthly sales for the first year of startup are given below:
6.5 Sales Yearly
Our forecasted yearly sales for the first three years of startup are given below:
If you are starting a nursing home care business, you must focus on the staff you are going to hire. You will need the staff which is compassionate enough to understand the misery and distress of the elderly people when they find that they are not cared like the way they deserve. You should keep in mind that you will be dealing with those people who get emotional at small things and hire your members accordingly if you really want to serve them.
7.1 Company Staff
Kate will hire the following staff for starting a personal home care business:
- 1 General Manager for managing the overall operations
- 2 Accountants for maintaining financial records
- 2 Cooks for preparing meals
- 5 Nurses for examining and treating the residents
- 10 Nursing Assistants for aiding the residents with their daily works
- 5 Recreational Workers for indulging residents in indoor and outdoor activities
- 5 Cleaners to maintain extreme cleanliness
- 2 Drivers for providing transportation facility
- 2 Physiotherapists for the therapy and physical exercise of the residents
- 2 Security Guards
7.2 Average Salary of Employees
The average salary of our staff is summarized in the following table:
|Year 1||Year 2||Year 3|
To run a nursing home business successfully you don’t only require the passion for it but also a large amount of money to meet with the daily expenses of so many people, among whom some can be disabled or suffering from any disease. For balancing your incomes with your expenses, you need a financial plan. A detailed and accurate financial plan must be devised before a personal care home business start up. In your financial plan, you have to develop an outline defining nursing home business profit and a record of your investment group business plan and expenses.
If you need some help regarding the formulation of a financial plan for your business, you can take help from this sample business plan on how to open a nursing home business. But if you are opening the nursing home on a very large scale, you must seek the help of financial experts to make you a financial plan according to your actual expenses and investments. The detailed financial plan of Kate Nursing Home for the next three years is given below.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||11.00%||12.00%|
|Long-term Interest Rate||10.00%||10.00%||10.00%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5530|
|Monthly Revenue Break-even||$159,740|
|Average Per-Unit Revenue||$260.87|
|Average Per-Unit Variable Cost||$0.89|
|Estimated Monthly Fixed Cost||$196,410|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$15,100||$19,153||$23,206|
|TOTAL COST OF SALES||$15,100||$19,153||$23,206|
|Gross Margin %||94.98%||94.72%||94.46%|
|Sales and Marketing and Other Expenses||$1,850||$2,000||$2,150|
|Total Operating Expenses||$188,766||$220,744||$252,722|
|Profit Before Interest and Taxes||$105,205||$146,040||$186,875|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$7,023||$8,610||$9,297|
|SUBTOTAL CASH FROM OPERATIONS||$47,143||$53,651||$59,359|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$47,143||$53,651||$55,359|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$35,296||$39,549||$43,582|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$35,296||$35,489||$43,882|
|Net Cash Flow||$11,551||$13,167||$15,683|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$201,259||$237,468||$273,677|
|TOTAL LONG-TERM ASSETS||$980||$610||$240|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$9,482||$10,792||$12,102|
|TOTAL LIABILITIES AND CAPITAL||$198,839||$232,978||$267,117|
8.6 Business Ratios
|Year 1||Year 2||Year 3||Industry Profile|
|Percent of Total Assets||4.35%||4.71%||5.80%||9.80%|
|Other Current Assets||1.75%||2.02%||2.29%||27.40%|
|Total Current Assets||138.53%||150.99%||163.45%||54.60%|
|Percent of Sales|
|Selling, General & Administrative Expenses||74.29%||71.83%||69.37%||65.20%|
|Profit Before Interest and Taxes||26.47%||29.30%||32.13%||2.86%|
|Total Debt to Total Assets||2.68%||1.04%||0.76%||67.10%|
|Pre-tax Return on Net Worth||66.83%||71.26%||75.69%||4.40%|
|Pre-tax Return on Assets||64.88%||69.75%||74.62%||9.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||19.20%||21.16%||23.12%||N.A.|
|Return on Equity||47.79%||50.53%||53.27%||N.A.|
|Accounts Receivable Turnover||4.56||4.56||4.56||N.A.|
|Accounts Payable Turnover||14.17||14.67||15.17||N.A.|
|Total Asset Turnover||1.84||1.55||1.26||N.A.|
|Debt to Net Worth||0||-0.02||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$120,943||$140,664||$160,385||N.A.|
|Assets to Sales||0.45||0.48||0.51||N.A.|
|Current Debt/Total Assets||4%||3%||2%||N.A.|
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