How to Start an Assisted Living Facility

Written by Dave Lavinsky

how to start an assisted living facility

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Starting an Assisted Living Facility can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching and running a successful Assisted Living Facility.

Importantly, a critical step in starting an assisted living facility is to complete your business plan. To help you out, you should download Growthink’s Ultimate Assisted Living Business Plan Template here.

8 Steps to Start a Successful Assisted Living Facility

As you may know, there is a growing elderly population and many people are unable to keep up with those responsibilities of daily living on their own. This shift in demographics presents an opportunity for those who have the skills and resources needed to give these people a more comfortable existence as they age. To start this type of business, some means must be developed to be able to care for the elderly and help them maintain their quality of life through all stages of life.

The following steps can be taken in order to ease the process of starting an assisted living home:

1. Analyze the Need

One of the first steps to start an assisted living business is to analyze what your needs are and determine which options will best meet those needs. This step may be more complicated than it sounds, since there are many different types of assisted living facilities that can cater to a wide spectrum of needs.

Residential Assisted Living Facilities

This type of assisted living business takes care of all basic needs, including cleaning, cooking and laundry. The people who live here are often still fairly independent but need some help with daily activities.

Adult Family Care Homes

Adult family care homes, also known as transitional care or board and care homes, help people transition from their homes to an assisted living facility. Typically, this type of home has fewer staff members and provides fewer services than other types of assisted living facilities.

Continuing Care Retirement Communities (CCRC)

This option combines independent living with assisted living and/or nursing home care. It allows people to plan for their future needs and gives them the peace of mind that they can prepare to meet those needs as age progresses.

Nursing Homes

Nursing homes provide 24/7 medical care, usually in a hospital-like setting. The staff provides medication management, meal preparation, personal hygiene assistance and basic health services.

Onsite Care Centers

These include assisted living communities, adult family care homes and nursing homes, but they also include a long-term care hospital with medical services on the premises. These centers tend to be larger than most assisted living communities and provide more amenities for those who need intensive health services.

2. Determine Your Business Type

This step is vital, since it will help you decide what license(s) you’ll need to operate your business and who will be legally responsible for the quality of care you provide. The type of license to obtain should reflect the type of senior living facility your business will provide. Some factors that may affect the choice are the number of residents, the extent of care needed by each resident and whether or not you have nursing services on your premises.

Assisted Living Certification

If you don’t provide nursing services, then an assisted living certification may be all that is required in order to run a successful business. This certification will require that there be at least one staff member for every six residents.

Residential Assisted Living Facility License

This license requires that at least one staff member be on the premises 24 hours a day, 7 days a week in order to provide around-the-clock supervision and assistance. This level of care is required if you have nursing services on your site or you house more than 16 residents.

Nursing Home License

A nursing home license is required if you provide around-the-clock medical supervision and assistance, such as administering medication. This type of license can be acquired only after you meet all the requirements for a licensed assisted living facility and the government determines that your assisted living residences are comparable to those of a nursing home. You must also meet specific construction codes and have a minimum number of staff members on duty at all times.

3. Write an Assisted Living Facility Business Plan

This key document will summarize all your research and planning, while also providing a roadmap for the future. The business plan should include all the strategies you’ve developed to achieve your goals. Beyond that, it should include all the information necessary to convince investors or lenders that your business is sound and worthy of their support.

To get started on writing your business plan, consider hiring a consultant or using an assisted living business plan template to help you formalize your business concept.

To enhance your planning process, incorporating insights from a sample assisted living facility business plan can be beneficial. This can provide you with a clearer perspective on industry standards and effective strategies, helping to solidify your own business approach.

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4. Obtain Financing and Rent or Purchase a Property

Many assisted living facilities require significant amounts of capital and long-term bank loans to cover assisted living startup costs and operating expenses. As such, you’ll need to develop a solid financial plan that will convince potential investors or creditors that your business is sound and that it’s worthy of their investment.

Potential financing sources for this type of business include traditional banks, venture capital firms and private investors.

Once you’ve determined the type of facility your business will be, start looking for a property. When renting or buying a building to house your assisted living community, there are several factors to consider:

  • Accessibility – Be sure that all residents can access essential parts of the facility by looking for driveways and sidewalks that are wide enough to accommodate wheelchairs. Also, make sure there are no steps or steep inclines at the entrance.
  • Site Requirements – There should be some green space on the premises, as well as ample parking near the entrance to allow easy access for staff members, visitors and residents. If there is a garage, it should be large enough to accommodate your vehicles.
  • Safety and Security – You’ll need emergency lights to provide illumination in the event of a power outage. Also, place at least one fire extinguisher within reach of all residents and staff members, as well as an evacuation plan for everyone on the premises.

5.  Get the Proper Insurance

Before you open your doors to the public, get all required insurance. Since insurance requirements vary by state and locality, it’s important that you contact the Department of Insurance in each state where you’re doing business to determine what types of coverage are necessary and how much they will cost. This may include, but is not limited to the following insurance policies:

  • Workers’ Compensation Insurance
  • General Liability Insurance
  • Property/Casualty Insurance
  • Umbrella Insurance

Contact your insurance agent or broker to discuss your business plan and get insurance quotes. Your insurer should also advise you on licensing and permit requirements and how to ensure regulatory compliance.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Assisted Living Business Plan Template and complete your plan and financial model in hours.

6. Market Your Assisted Living Facility

There are several methods for marketing an assisted living facility, including traditional types of advertising and social media.

  • Traditional Advertising Methods – Depending on the type of assisted living facility you have, you may want to develop a radio or television campaign. However, before you invest large sums of money in broadcast advertisements, make sure you test their effectiveness with other types of traditional ads, such as print advertisements in newspapers or magazines.
  • Internet Advertising Methods – Online ads are relatively inexpensive to produce, but they have the capability of reaching a very wide audience. Social media sites like Facebook and Twitter are great places for promoting your assisted living home, as well as search engines like Google or Yahoo that drive traffic to their own websites.
  • Public Relations – This is one of the most important methods for attracting customers and prospective residents. Get out in the community and talk to as many people as possible. Let them see that you’re knowledgeable about your business and that you’re passionate about improving their lives.

7. Hire Dependable Employees & Provide Training

The success of your assisted living facility will depend, in large part, on the people you hire to manage it. As such, it’s essential that you find individuals who are reliable and aspiring. The more training they receive before they start working for you the better.

  • Training New Employees – Develop an orientation and training program and make sure all new hires attend and participate in it. Outline specific tasks that need to be completed and the medical equipment they will be using, such as gear or transportation vehicles.
  • Promote from Within – Establish a policy of promoting from within so employees can receive additional training and move up in the company. This is especially important for nurses, who should have experience at the assisted living home before they are promoted to assistant or head nurses.
  • Create New Opportunities – If you’re struggling to find qualified applicants, consider partnering with local colleges. They may need an opportunity for students to gain their clinical hours, and your business will benefit by having access to new talent.

8. Follow Government Regulations

Regardless of how well-trained your staff are, you must follow all regulations regarding client rights and safety.

  • Develop Standard Operating Procedures – According to the American Health Care Association (AHCA), all assisted living facilities must have written SOPs, which are reviewed with new hires during orientation. These procedures should be followed precisely because they reflect the facility’s personality and culture.
  • Ensure Cleanliness – In addition to following state sanitation guidelines, make sure the assisted living facility is kept clean at all times. Offering freshly laundered linens and uniforms to clients will impress them, along with providing high-quality bathroom tissue and starting your laundry early each day so there are no lingering smells or stains on dishes or flatware.

By following these steps, any person can open their own assisted living home and start helping those in need.

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Assisted Living Business Plan Template and complete your business plan and financial model in hours.

How Big is the Assisted Living Facilities Industry?

The assisted living facilities industry is booming with more than $32 billion in annual revenue, and is estimated to continue its growth at a rate of 3.8% over the next 5 years. 

According to the US Census Bureau, more than 80% of seniors over 65 will require long-term care at some point after retirement. Even if this care is only needed for a brief period, it can still be incredibly expensive and family members may not fare well financially as they try to balance their work schedule with caring for a loved one who cannot take care of themselves anymore.

What are the Key Segments of the Assisted Living Facilities Industry?

The assisted living facilities industry is made up of four key segments, including personal care services, medication management, basic activities and skilled nursing.

Personal Care Services – Usually the largest segment within the assisted living facilities industry, this subdivision consists of individuals who are not dependent on any medical equipment. Their main focus is to provide staff that can help with minor tasks such as cooking, cleaning and shopping.

Medication Management – In this division, the staff helps clients take medications correctly and on time to ensure they stay healthy. Staff can also help clients manage chronic conditions, such as diabetes or heart disease, so they do not have a major impact on their daily lives.

Basic Activities – Requires a good deal of social interaction and exercise because many individuals need help getting outside or to an activity. Most basic activities programs focus on helping clients with physical therapy, crafts, board games and organized outings to parks or shopping malls.

Skilled Nursing – This subdivision focuses on providing medical attention when necessary, including hospitalizations due to severe health conditions. Skilled nursing staff can also keep a watchful eye on chronic conditions and report any changes to a client’s primary care physician.


Who are the Key Competitors in the Assisted Living Facilities Industry?

When starting any type of small business, you will have competitors to contend with. Here are some examples of competitors in the assisted living facilities industry:

  • Nursing homes
  • Health care centers
  • Board and care homes
  • Adult daycares
  • Individual caregivers that work out of their home or office

Many people want to be cared for in a familiar environment, which is why it’s important to be able to offer this to clients who come through your doors. Your location can also affect your clientele base because people prefer to stay closer to where they live instead of having to travel farther or go into a different neighborhood for services. You should also take safety precautions to make sure you only accept those who are physically and mentally capable of living in a facility.

Make sure to research competitors within your area before opening up shop so that you’re confident about what services you can offer and how you will set yourself apart from other providers. Your administrator should always know the prices for similar products or services to ensure you aren’t charging too much or selling your product at a loss.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Assisted Living Business Plan Template and complete your plan and financial model in hours.

What are the Key Customer Segments in the Assisted Living Facilities Market?

According to the US Census Bureau, there are more than 43 million seniors in the United States. By 2050, that number is expected to reach 98 million. As people live longer lives filled with better health care and medical advancements, they are staying healthier for longer periods of time which means they need different kinds of help as they age.

The main customer segments you should be targeting are:

  • Seniors over the age of 65
  • Families who help care for a senior loved one at home
  • Baby Boomers starting to plan for their retirement and the long-term care they may need as they age

While some seniors prefer to live on their own, others, including their family members, would benefit from assisted living services. These services can range in scope depending on each senior’s needs. Some may only need help with housekeeping, laundry, and meal preparation while others might need more extensive care like assistance with dressing or bathing.

What are the Typical Startup Costs for a New Assisted Living Facility?

It depends on the type of services you provide, the number of clients in need, and other factors. However, starting up an assisted living business can cost approximately $100,000-$500,000 in the average case. 

You will have to take into account all the necessary expenditures including staffing and labor costs (which usually costs tens of thousands), install security systems and a high tech computer system for record-keeping purposes ($50,000+), build or refurbish your building ($10,000+ depending on size), buy supplies including food and linens for residents ($5,000+/mo.), advertise your new business ($2,000+/mo.), etc.

The best way to figure out what you need is by writing up a comprehensive business plan. This business plan should include an estimated budget for the first three years along with how much startup capital you will need to buy or lease your facility. You can also ask for individual donations from family members, friends, and community members if there isn’t enough money involved in starting up your business.


Is Owning an Assisted Living Facility Profitable?

Yes, if you follow the golden rule of business: provide a service that other people need or want. The more clients you have, the more money you will make. There will always be some difficulties when trying to start up your own assisted living facility since these businesses require large initial investments and ongoing operational costs. However, if you are able to successfully run your business and stay on top of all the changes in the industry, you will be able to make a significant amount of money.


What are the Keys to Launching a New Assisted Living Facility?

The keys to launching a new assisted living home include knowing your client population and how they can be best served, finding out what type of care they need and how it will be provided, and having all the necessary permits and certificates in place before opening for business. All of these factors should be included and addressed in your business plan.

To start a new assisted living facility, you will need to obtain the appropriate permits and certificates. This includes registering your name and location with your state, getting a license for operating this type of business (some states may call it an assisted living home), and adhering to all local zoning laws regarding where you can do business.

In order to make sure your assisted living home is run by state regulations, it’s important to know what they entail. This includes everything from how many light fixtures need to be in the building and how often they need to be cleaned up to checking on clients every hour and reporting any maltreatment immediately. Similar requirements apply even if you’re just renting out space in your home to clients.

When it comes down to staffing an assisted living home, you should have a Director of Nursing, Administrator, Nurse Practitioner, Licensed Practical Nurses (LPN), CNA’s, and CNM’s. In addition to these positions, there are also many other types of medical professionals that you should consider hiring such as physical therapists or home health aides.


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How to Start an Assisted Living Facility FAQs

You can download our assisted living business plan PDF template here. This is a business plan template you can use in PDF format.

There are different types of assisted living homes that you can open depending on what type of care your clients require. The main types are memory care, independent living, and medical treatment centers.

  • Memory care assisted living facilities provide assistance with activities of daily living while helping clients retain their independence in their home environment for as long as possible.
  • Independent living facilities do not offer any form of medical assistance but can help clients find suitable accommodations while they remain self-sufficient.
  • Medical treatment facilities help seniors who have been diagnosed with particular illnesses such as dementia by providing regular checkups.

It usually takes around six months to a year for everything from starting up your business and hiring staff to getting the necessary certificates to be completely operational.

Having compassionate and dedicated staff members is one of the most important factors for any assisted living facility. Assisted living clients are usually elderly people at the end of their lives, so it's crucial to have compassionate caregivers who are equipped with the knowledge and training they need in order to offer quality care that ensures safety and wellness.


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