How to Open a Retirement Home (Starting an Assisted Living Facility)

How to Open a Retirement Home (Starting an Assisted Living Facility)

Opening a retirement home is usually a labour of love, not a way to make a lot of money, though you might be able to make $100,000 USD per year under ideal conditions. To begin assisting seniors in need, decide what level of care you want to provide—for the purposes of this article, we’ll equate “retirement home” with “assisted living facility.” After that, you can get to work on establishing your company, locating the ideal facility and personnel, and welcoming your first group of residents.

Method 1 Choosing the Care Level You’ll Provide

1. To assist semi-independent residents, open an assisted living facility. An assisted living facility (or “supportive housing facility”) is the way to go if your idea of a “retirement home” includes assisting senior residents with their daily needs but does not include round-the-clock medical care. It is also the main focus of the rest of this article. Assisted living facilities do not typically provide direct medical care, but they do provide services such as the following:

Surveillance and security are available 24 hours a day, seven days a week.

All meals must be prepared and served.

Prescription medications are administered.

Providing personal care assistance such as bathing, dressing, and toileting.

Housekeeping and laundry services are provided or assisted with.

Organizing social and recreational activities for the residents.

2. Run a nursing home to provide residents with ongoing medical care. Nursing homes, also known as “skilled nursing facilities” and “long-term care homes,” always have nurses and other medical professionals on staff to provide care. Nursing home residents have moderate to severe medical needs that may necessitate frequent to near-constant attention. Nursing homes have higher operating costs and regulatory requirements than assisted living facilities due to their higher level of care.

If you want to open this type of “retirement home,” read this wikiHow article: How to Open a Nursing Home.

3. Start an independent living facility that will provide housing but not ongoing care. Residents in these facilities live essentially independently, preparing their own meals and managing their own medical and personal care. Your primary responsibility is to provide the residents with a safe, healthy, and happy living environment while allowing them to live their lives as they see fit.

Although this type of facility is typically subject to less government regulation, you will almost certainly need to be licenced to operate one.

While the rest of this article focuses on assisted living facilities, much of the advice (particularly on starting a new business) is still applicable if you want to open an independent living facility.

It’s a bit confusing, but these facilities are commonly referred to as “retirement homes” in Canada, whereas the term is more commonly associated with assisted living facilities in the United States.

Method 2 Setting up Your Business and Facility

1. Investigate the market as well as the regulatory requirements in your area. In fact, this should be one of the first steps taken when starting any type of business. Conduct basic research via internet searches, but also look into government publications on topics such as demographics, economic activity, and business regulation. Find answers to the following questions:

What are the number of assisted living facilities in the area? Are the facilities full, nearly full, or overflowing? Is there a need for additional facilities? What is the potential growth in the number of seniors in the area?

What is the area’s overall economic climate? What level of care or facility can your target demographic of seniors typically afford? How much do your rivals charge?

How easy or difficult do similar businesses find it to navigate all of the regulatory stumbling blocks?

2. Calculate your startup and initial operating expenses. To guide these estimates, use your research on the local market and existing assisted living facilities. Your startup estimate will be large—perhaps $500,000 USD or more—but it’s critical to give yourself a realistic picture of what you’ll need to succeed. Here’s an example of a basic 20-bed assisted living facility:

Purchase of an existing facility for $2 million USD (with a 20% down payment): $400,000.

Small upgrades to existing furniture and equipment: $25,000

$100,000 in working capital (60 days’ worth of operating expenses, including salaries, food, medical and home supplies, insurance, and taxes).

The total startup cost is estimated to be $525,000 USD.

3. Incorporate your financial research into a more comprehensive business plan. A well-written business plan is required if you want to obtain a loan to start your assisted living facility, and it is a good idea in any case. While there is no standard format or length for a business plan, it should probably be between 10 and 30 pages long and include sections such as the following:

Executive Summary: Describe your company and why it will succeed.

Company Description: Describe the structure and function of your company.

Market Analysis: Describe your target market as well as the competition.

Organization and Management: Determine the facility’s key leadership.

Services Offered: Describe what your facility will offer residents.

Marketing Strategy: Describe how you intend to attract residents.

Funding Request: Specify the amount and type of funding that you require.

Financial projections: provide a forecast for the next five years.

Include an appendix with supporting documents to bolster your case.

4. To obtain funding from banks or investors, use your business plan. Because assisted living facilities have high startup costs, you won’t be able to start your business with self-funding (using your own savings). Instead, use your business plan to pique the interest of potential lenders and investors, such as the following:

Small business loans can be obtained from banks or credit unions.

Individual investors will contribute venture capital.

If you are having difficulty obtaining traditional loans or investments, consider Small Business Administration (SBA)-backed loans or investment programmes (in the U.S.).

5. To protect your personal finances, form an LLC. A limited liability company (LLC), as the name implies, limits your personal financial liability in connection with the operation of your business. Starting an LLC is relatively simple, but there are many state-specific requirements, so you should consult an attorney who specialises in LLCs in your area. The basic procedure is as follows:

Create a distinct name for your LLC and register it with your state.

Choose a management structure for your LLC and a “registered agent.”

As needed, apply for a tax ID and a bank account for your LLC.

File an operating agreement outlining your LLC’s specific “rules.”

NOTE: If you live outside of the United States, consult with an attorney to establish a similar business entity that will limit your personal financial liability.

6. Purchase, renovate, or construct a facility that meets all legal requirements. An assisted living facility can be anything from a large home to a closed school building—a former apartment building, for example. Whatever structure you choose, it must have enough guest rooms, restrooms, and space for things like meal prep and social activities to meet your facility’s needs. It must also comply with any legal and licencing requirements in your area.

In Texas, for example, the facility must pass a “Life Safety Code” inspection before it can legally open.

When developing your business plan, remember to account for facility expenses such as upkeep, utility bills, property taxes, and expansion plans.

7. Apply for the licences you’ll need to run a business in your area. While there isn’t as much “red tape” as there is with a nursing home, opening an assisted living facility does require a fair amount of jumping through bureaucratic hoops. For example, you’ll almost certainly need to apply for and receive an operator’s licence. To get a sense of where to begin, visit the website of the licencing authority in your area, such as the HHS in Texas or the DSS in California.

Working with a business attorney who has experience in the retirement home field can be well worth your time.

8. Hire or become a certified facility administrator. This certification, like the other licences and certifications you’ll need, varies by location. However, in some states, such as California, your business must have a certified facility administrator in order to legally operate as a retirement home. To earn this type of certification, you may need to take classes, pass exams, and pay a variety of fees, so find out what’s required in your area early on.

In California, for example, to become a certified facility administrator, you must complete an 80-hour course, score at least 70% on a 100-question test, and have some combination of higher education and relevant job experience, among other requirements.

Method 3 Opening for Business

1. Hire and train a top-notch team for your facility. Your facility’s reputation will be heavily influenced by the reputation of its staff—the people who interact with residents and their loved ones on a daily basis. Begin your team search early in the process to give yourself more time to find and hire a group of caring and dedicated professionals. Ascertain that they have received or will receive the necessary training, and that they share your vision for resident care.

Your facility’s staffing requirements will vary depending on its size and specifics, but you’ll almost certainly need a combination of the following: an administrator (if it’s not you); administrative staff; registered nurses (RNs) or, more commonly, certified nursing assistants (CNAs); aides; housekeepers; custodians; and dining staff members.

2. Create a distinct brand identity for your facility. Consider this: why should prospective residents and their loved ones choose you, the new kid on the block, over established assisted living facilities in the area? What distinguishes you? Your responses to these questions should influence everything from your advertising strategy to the design of your facility.

Many assisted living facilities want to build their brand around the concept of “treating our residents like family.” Make your facility stand out by modifying the “family” branding strategy to focus on a specific priority, such as keeping residents active and engaged: “Friendly people and fun times in a family setting.”

If you want to emphasise your local ties with your branding, consider decorating the facility with vintage sports and band equipment from the local high school.

3. Concentrate your advertising to reach your intended audience. Remember that your target audience includes not only potential residents but also their loved ones. To reach potential residents, you could use local TV, radio, and newspaper advertising, as well as a social media presence to engage with their middle-aged children. Keep your brand identity consistent throughout, but tailor your advertising to that specific segment of your target audience.

For example, your television and radio advertisements may emphasise fun activities and affordability, whereas your social media presence may emphasise safety and quality of care.

4. Choose your first group of residents with care. It may appear distasteful to discuss being “choosy” when it comes to seniors who require assistance living with dignity, but the point here isn’t to label potential residents as “good” or “bad” options. But it’s also a fact that you can’t admit every person in need into your new facility, so think about how the residents you admit, along with the initial staff you’ve hired, will help set the tone for your facility.

Because of average lifespan differences, assisted living facilities frequently have 2-4 times more female residents than male residents, so including three male residents in your first group of eight admissions may give you a reputation as a more gender-balanced facility.

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