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1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocation of $2 million for the development of a moderate-scale assisted living facility based in California. Assisted Living Facility, LLC (“the Company”) intends to create a 25 room facility that will provide ongoing care for residents within the target market. The Company was founded by Jane Smith. The business will produce substantial monthly fees from the ongoing rental of rooms while providing a comprehensive level of care for all residents.
1.1 The Services
As stated above, the Company will provide outstanding accommodations for people that need ongoing care in an assisted living environment. The Company will have a number of medical professionals on staff including registered nurses and nurse practitioners that can render services as needed. The business will also contract with mental healthcare professionals so that residents that have these types of issues can get the care they need onsite.
In regards to fees, the company anticipates that it will generate $4,000 per month from each resident. Many residents are expected to have fixed incomes from social security and investments. As compared to the median household income of the target market, the monthly fees are reasonable.
In order to provide an immense degree of care for residents, there will be numerous entertainment programs in place. These programs will include regular outings and activities that are stimulating. This is especially important for people that have memory care needs.
The third section of this document will further showcase the operations of the Assisted Living Facility.
1.2 Financing
At this time, the Company is seeking $2,000,000. The funds will be principally used for the following:
- Location development in California.
- Furniture, fixtures, and equipment
- Working capital
- Professional fees and licensure
Jane Smith will contribute $250,000 towards the development. In the future, the Company may acquire additional rounds of capital in order to further fuel the growth of the business. However, it is anticipated that the business will primarily finance its expansion needs with retained earnings (after-tax). Only in the event that a second facility is developed would Management seek to acquire additional debt or equity capital.
1.3 Mission Statement
The Assisted Living Facility’s mission is to provide a caring and enriching environment for its residents that provides outstanding home-like amenities at a reasonable cost.
1.4 Management Team
Jane Smith has more than 15 years of experience as an assisted living facility manager. Through her experience, she will be able to quickly establish the operations of the business while bringing the Company to profitability.
1.5 Sales Forecasts
1.6 Expansion Plan
Management anticipates that the Assisted Living Facility location will reach maximum occupancy in the second year of operation. At this time, the Company may establish additional locations if it is economically feasible to do so.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Assisted Living Facility, LLC.
2.2 Required Funds
Management is currently seeking $2 million to establish the Assisted Living Facility within California. The funding will be used as follows:
2.3 Investor Equity
Although not needed at this time, the Company could easily acquire funding from an investor for future expansion purposes.
2.4 Management Equity
Jane Smith is the sole member and 100% owner of Assisted Living Facility, LLC.
2.5 Exit Strategy
Given the economic stability of assisted living facilities, these businesses command a significant price to earnings multiple. In the event of a business sale, the Company will work with both a real estate brokerage and business brokerage in order to divest the business to a third party. Given the scale and scope of this facility, the Company could be worth as much as $4 million by the third year of operation.
3.0 Operations
As stated in the executive summary, the Assisted Living Facility will be a moderately-scale standalone building that can comfortably house 25 residents at any given time. Within the facilities, approximately 5 rooms will be able to accommodate up to two residents. This will allow the Company to more affordably provide its services to the general public.
The location will feature a gaming room, kitchen (that will be supervised at all times), dining room, and events center. In order to provide entertainment for the Company’s residents, the location will feature numerous large screen TVs, a pool table, a library, and other amenities. This will not only provide residents with a comfortable living space, but it will also provide a competitive advantage as it relates to marketing.
The Company, on an independently contracted basis, will have nurses and nurse practitioners visit the facility on a daily basis. This will ensure that among residents that need specialized care – they can be quickly attended to without issue. The Company will also contract with a physician that will serve as the business’ medical director.
Assisted Living Facility will have a large-scale van that will be able to transport residents for outings within the target market. The business will frequently have its residents visit parks, museums, and participate in community gatherings. Again, this will further contribute to the marketability of the business.
An additional vehicle will be acquired in order to transport residents to and from medical appointments when needed. These transportation services will be billed in addition to the monthly fees charged to residents.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This chapter of the business plan will detail the assisted living facility industry, the resident profile, the competition, and an analysis of how issues with the economy can impact operations.
At this time, the US economy is doing reasonably well. The economic issues that arose from the pandemic have been remedied through outstanding monetary policies. Although issues with inflation still remain, the Federal Reserve has implemented policies that have brought this rate down over the past twelve months. It is expected that interest rates will fluctuate more mildly now that volatility in the market has abated.
Any future issues with the economy will not impact the Assisted Living Facility’s ability to remain profitable and cash flow positive. These types of residents remain in demand at all times given that they are a necessity for older people. The only matter that would impact the Company is continued increases in interest rates should the business decide to establish a second location and to use debt to carry out this expansion.
4.2 Industry Analysis
Within the United States, there are approximately 70,000 companies that own and operate one more assisted living facility locations. The growth of this industry has remained incredibly strong over the past ten years as the number of people over the age of 65 has increased. Each year, these entities collectively generate in excess of $200 billion. The assisted living industry employs over one million people. It is an extremely important part of the US economy.
Given the ongoing demand for assisted living facility services, the Company is in an excellent position to expand over the next three years. As mentioned earlier, the economic stability of these enterprises allows ALF companies to acquire additional capital as needed for growth.
4.3 Customer Profile
Any person that is over the age of 65 or requires specialized care is a potential resident for the Assisted Living Facility. Given the expense of the facilities, it is expected that these individuals will have a fixed income that ranges from $75,000 to $100,000 per year.
In furthering this section of the analysis, you should determine the number of people that are over the age of 65 within your respective market. Calculations regarding the number of people that require assisted living facility services should be addressed as well. Additional metrics that should be included consist of median household income and median home value. This will provide an in-depth view of the wealth of your specific market.
4.4 Competition
The Assisted Living Facility will feature a number of amenities that will make the location a premier provider of care in the market. As discussed in the third section of this business plan, the location will feature numerous amounts of entertainment, single rooms, transportation, and related services that will improve the lives of residents.
When discussing the competitive issues with your business, you should focus on the number of competing locations in your market. Additionally, it is important to note how your facility will maintain differentiating factors. A substantial discussion regarding pricing advantages should be included in this section as well.
5.0 Marketing Plan
In order to ensure that the business rapidly achieves maximum capacity, the Company has developed a number of marketing strategies that will allow Assisted Living Facility, LLC to become the provider of choice within the target market. It should be noted that the cost of the Company’s marketing campaigns will decline in the third year of operation as 100% capacity will be achieved. Management anticipates that it will be relatively easy to fill vacancies as they occur given the demand in this market.
5.1 Marketing Objectives
- Maintain a proprietary website and presence among all social media platforms (which will include use of targeted social media advertisements among people that have recently searched for assisted living facilities).
- Foster ongoing referral relationships with physicians, mental healthcare professionals, and healthcare companies.
- Implement traditional marketing/advertising strategies that includes print advertisements among publications that are geared toward people over the age of 65.
5.2 Marketing Strategies
The Company will use a number of marketing strategies that will create substantial awareness and brand name visibility for the Assisted Living Facility. It should be noted that many of the marketing strategies discussed here will be implemented prior to the launch of the facilities. As there is significant demand within the target market, Management anticipates that many families will pre-enroll their family members as residents prior to the grand opening. This will substantially reduce the operational risks of the business.
The Company will establish strong relationships with healthcare providers throughout the target market with a focus on physicians that provide geriatric care. This will ensure that the Company receives ongoing referrals among providers that understand that the individual needs ongoing support for their daily lives. The business will distribute a substantial amount of sales literature to these professionals that showcase the facility, pricing, and availability of units. The Company will also coordinate with mental healthcare professionals in order to have residents that may not be over the age of 65, but require ongoing care.
Assisted Living Facility, LLC will maintain a website that is search engine optimized specific for the target market. The website will showcase the rooms and amenities that are offered. The business will have a professional videography company create walk-through videos of the premises and campus. These videos will be uploaded to video sharing sites and presented on the Company’s website and social media pages. Interviews with senior staff will also be conducted.
To a more modest extent, the Company will maintain pages among all social media platforms. On these platforms, the Company will use targeted advertisements among people that have recently conducted a search for assisted living facilities in the target market area.
Management will also take out half-page and full-page advertisements among lifestyle and health magazines that are circulated in the target market area. As discussed above, this type of marketing will be reduced once the business reaches maximum capacity.
5.3 Pricing
Generally, the Company anticipates revenues of $4,000 per month per resident. Additional fees will be generated from specialized transportation services that will be provided to residents that have appointments at medical facilities.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
The Company has based its proforma financial statements on the following:
- The business will acquire a $2,000,000 loan in order to establish the Assisted Living Facility.
- The loan will have a 30 year term with a 7% interest rate.
- Most short-term payables will be satisfied on a monthly basis.
7.2 Sensitivity Analysis
The Company’s revenues are wholly immune from negative changes in the economy. People that are over the age of 65 frequently require assisted living services as they enter their later years and as they have more complex care needs. The Company will have controllable fixed operating costs that will further contribute to the economic stability of the business. Additionally, the fixed income nature of the residents will ensure that timely payments for monthly fees are made.
7.3 Source of Funds
7.4 Tax Assumptions
7.5 Profit and Loss Statement
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 Breakeven Analysis
7.9 Business Ratios
