A business plan provides a snapshot of your residential assisted living facility as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Business plan for assisted living facility

If you’re looking to start an assisted living facility or grow your existing facility, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your assisted living facility in order to improve your chances of success. Your residential assisted living business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Assisted Living Facilities

With regards to funding, the main sources of funding for an assisted living facility are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will want to confirm that your financials are reasonable and see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for an assisted living facility is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a residential assisted living business. They might consider funding an assisted living facility with a national presence, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.

How to Write a Business Plan for a Residential Assisted Living Facility

If you want to start an assisted living facility or expand your current one, you need a business plan. Below we detail what should be included in each section of your residential assisted living business plan template:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of facility you are operating and the status; for example, are you a new business, do you have an assisted living facility that you would like to grow, or are you operating a network of assisted living facilities?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the assisted living facility industry. Discuss the type of assisted living facility you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Overview

In your company analysis, you will detail the type of assisted living facility you are operating.

For example, you might operate one of the following types of assisted living facilities:

1. Residential living: this type of facility caters to seniors who need minimal assistance and can manage their daily routines without complex medical monitoring.
2. Memory care: this type of facility specializes in helping seniors who live with Alzheimer’s disease or dementia.
3. Rehabilitation: this type of facility caters to seniors who need physical, speech, or occupational therapy.

In addition to explaining the type of assisted living facility you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include occupancy goals you’ve reached, awards you’ve won, new buildings you’ve opened, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the assisted living facility.

While this may seem unnecessary, it serves multiple purposes.

First, researching the assisted living facility industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your business plan:

• How big is the assisted living facility industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your assisted living facility. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your assisted living business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: families of seniors requiring minimal to no care, families of seniors needing assistance with activities of daily living, and families of seniors needing memory care.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of assisted living facility you operate. Clearly, families of seniors requiring minimal care would want different services and would respond to different marketing promotions than families of seniors requiring memory care, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the customers you seek to serve. Because most assisted living facilities primarily serve individuals living in the same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other assisted living facilities.

Indirect competitors are other options that seniors have to choose from that aren’t direct competitors. This includes 55+ retirement communities, residential home care services, or adult daycares. You need to mention such competition to show you understand that not every senior that needs assistance will choose an assisted living facility.

With regards to direct competition, you want to detail the other assisted living facilities with which you compete. Most likely, your direct competitors will be assisted living facilities located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of seniors do they target?
• What services do they offer?
• What types of living arrangements do they offer?
• What is their pricing?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask the families of your competitors’ occupants what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior services?
• Will you provide services that your competitors don’t offer?
• Will you make it easier or faster for people to join your facility?
• Will you offer more physical and social activities?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an assisted living business plan, your marketing plan should include the following:

Product: in the product section you should reiterate the type of assisted living facility that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to standard services offered at an assisted living facility, will you provide exercise classes and equipment, on-site activities and events, transportation services, or pet accommodations?

Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place: Place refers to the location of your assisted living facility. Document your location and mention how the location will impact your success. For example, is your assisted living facility located in a neighborhood, or near a hospital, etc. Discuss how your location might be beneficial for attracting customers.

Promotions: the final part of your assisted living facility marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local websites
• Listing the business in targeted online directories
• Flyers
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your assisted living facility, including housekeeping, medical care assistance, and meal services.

Long-term goals are the milestones you hope to achieve. These could include the dates when you reach an occupancy of 100, or when you hope to reach $X in revenue. It could also be when you expect to launch an assisted living facility in a new location.

Management Team

To demonstrate your assisted living facility’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience working with seniors. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing assisted living facilities or successfully running small businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you have 10 residents or 60? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $100,000 on building out your assisted living facility, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a residential assisted living business:

• Location build-out including design fees, construction, etc.
• Cost of equipment like assistive devices, security/surveillance, and medical supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses