Growing a Care Home Business
While there is a lot of potential in the care home sector, it's not easy to grow your business. You may find yourself navigating compliance, high running costs and staffing problems.
If you have an existing business and have achieved full occupancy of your premises, then you might be ready to take the next steps towards growing your care home operation.
All the information you need
There's no denying the fact that the UK's population is ageing, and businesses in the care sector will need to step up in order to provide the necessary residential for the country's elderly people. Residential care is one of the biggest and fastest-growing parts of the care industry, with demand for care homes up year on year.
By 2026, at current market growth, there would be an additional 14,000 people in need of care home places every year. The Office of National Statistics (ONS) figures show the population of over-85-year-olds has increased by almost a third over the last decade to approximately 1.5 million. This figure is set to grow to 3.5 million over the next 25 years.
Care agencies providing domiciliary care and even children's care homes are also among those businesses expected to grow over the next fear years. So, whatever your business venture, if it falls under the care sector, then we can help you to grow while still providing the quality of care necessary to meet the demands of the Care Quality Commission (CQC).
In order to plot your path to growth, you will need a care home finance expert to help you find and secure the funding you need to succeed. That's where Rangewell's team of independent financial advisors can help. Get in touch to discuss your needs, or keep reading to learn more about growing your business.
Why grow your care home business
The first step towards growing your business, and boosting profits, is to write a care home business plan. This will help you to visualise your current circumstances, and identify opportunities for future growth. Perhaps your next step is to buy a care home or even sell one or more of your less profitable ventures.
To be profitable, your care home is already likely to have at least 25 residents. Finding space for a few more would obviously bring in additional revenue without creating too many demands on your existing facilities, such as staff levels or kitchen facilities.
It should be possible to add residents without major additional costs - ensuring that the additional fees will be translated directly into additional profits. The average weekly cost of living in a home is £730 with nursing and £530 without - making each extra resident you can welcome in mean an additional revenue boost of up to £36,000.
The challenge is finding additional rooms to offer to residents - while maintaining the standards of care you set for yourself and the CQC, your industry's governing body.
Extending your property
By providing more rooms, you can boost the value of your care home business. The solution may be to extend your existing property if you have your own grounds - or to acquire an adjacent property in an urban environment.
Both are major projects, requiring building work and disruption - but it may be possible to arrange both while minimising the inconvenience for your residents if you have the right funding in place.
Specialist builders exist for the medical and related sectors who may be able to provide solutions such as conversions of unused outbuildings as well as more straightforward extensions to your premises while keeping noise and dirt to a minimum. Turning a neighbouring building into a connected annexe might also be within their capabilities.
There will be some challenges to overcome. Remember, you will need planning permission from the local authority to extend your care home, and the change the use of any property that you want to use as an annexe - however the need for care home accommodation may mean that they are sympathetic to your needs and that you may be able to secure planning permission that would be denied to other types of business.
The key question may be the best way to deal with the costs.
What costs are involved?
Costs will vary substantially across the country. In some areas of London, acquiring a neighbouring property when it comes on the market might require funding of £1 million or more - especially if it is of comparable size to your existing premises.
However, if you can find the property you need, a care home mortgage could help you spread the cost of buying it over 20 years or more, with rates that reflect the profitability of your business - lenders will prefer a profitable, stable business with an established record of profitability.
The cost of providing refurbishment and building work could range from a few tens of thousands of pounds to several hundreds of thousands, depending on the scale of the work required. The costs will be comparable to those of extending your existing premises - which will usually be quoted based on a square metre basis, and so depend mainly on the size of the extension required.
Remember there will be architects and surveyors fees to pay before the work even starts.
There are a number of financial solutions available. Funding for this type of work might be provided with a commercial mortgage - or remortgage - on your existing property. This would allow you to raise a high level of funding, capable of dealing with most building projects. Rates for this type of loan may be low, sometimes as low as 2% above the base rate, and you may be able to have up to 10 years to repay.
Another solution is a secured loan, with the security provided by the property itself, which may work in a similar way.
The other costs involved
Of course, it will not be enough to simply provide additional rooms for your care or nursing home. Care home operators will also need to fit out the newly extended business, furnishing communal areas, and providing equipment such as medical beds, wheelchairs and hoists.
Asset finance lets you spread the cost of this type of equipment - or assets. It includes Hire Purchase or HP. Hire Purchase agreements generally last between 12 and 72 months and require a 10-20% deposit, and can be cost-effective for spreading the cost of buying durable items.
An alternative may be leasing, which can bring in equipment with no upfront costs. This may be more suitable for items such as medical beds with a high cost and limited life - the lease arrangement may include maintenance, making planning ahead simpler - you will know all the costs involved in your purchase.
Funding to grow your care home
At Rangewell, we aim to help businesses like yours get funding for care homes.
As independent brokers, we know the lenders and have access to a wide range of lenders who can help to turn your growth plans into a reality.
So, if you're looking for a way to grow your care home operation, and want to find out more about what we can do for you, simply give us a call today.