How to Write a Residential Care Home Business Plan
Care homes provide the opportunity to not only support some of the most vulnerable people in our communities but also potentially generate lucrative returns.
The residential nursing care industry is valued at £7.7bn in the UK, making it a stable and secure business direction for those with existing experience in the sector.
All the information you need
For those of you who are considering opening a care home or buying an existing one, you'll need some form of finance to make your dreams a reality. In order to secure care home finance, however, you'll also need to find the right lender and put together a robust application that includes a strong business plan.
To understand why you’ll need a residential care home business plan, you must first understand how care home finance works. There are many types of lender on the market, some of whom specialise in the care sector. All of them will require an application that outlines you and your background, your goals for the business and the details of the investment.
For lenders, your business plan gives them an idea of how well-planned your proposed care business is and how financially viable it will be.
But how do you actually create a business plan for UK care homes? Are they the same as standard plans or do you need to include something different? Let’s go through everything you need to know…
The first consideration: how to start a care home
The full process for buying or starting a care home is complex – but we’ve already covered it at length in this ‘how to buy a care home’ guide. If you’d like a full overview, go and take a look. However, in the context of a business plan, you need to understand some fundamental stages of the buying process:
- Identifying the right care home listing: you’ll need to assess your potential purchase around a few different factors.
- Location: assess the physical location of the care home and consider nearby towns or villages, public transport, car parking and access to hospitals or healthcare facilities.
- Beds: the amount of beds in a care home dictate the maximum income it can generate – some lenders will not offer finance for a property with fewer than 10-15 beds.
- Occupancy: if the care home is currently active, what level of occupancy does it have? Can you improve that to increase profits?
- CQC scores & reputation: you can look into the care quality commission’s scoring system as well as public-facing reviews such as Google Business listings to ascertain how reputed the care home is.
- Selecting the ideal lender: as we’ve mentioned above, some lenders won’t offer finance to smaller care homes, but others specialise in that approach. Your job as a buyer is to identify the right lender. This is where our finance experts come in, guiding you to the right lender to help you meet your goals.
- Submitting an application: you’ll need to submit an application to your chosen lender, who will review criteria such as your experience, your business plan and your financial situation. This is why business plans for care homes are so vital - they help to ensure that your business idea is viable and sustainable in the eyes of the lender.
While there are more steps after you’ve secured a decision, we’ll focus on the business planning stage to help you maximise your chances of success.
Write a care home business plan
Like a standard business plan, your care business plan will outline the nature of your business, including your corporate structure, proposed products and services and the expansions or upgrades you intend to make. These elements form the core structure of the plan and help not only win lender confidence but also ensure you have a solid foundational plan to grow your business around.
Let’s take a look at a care home business plan example layout and analyse what needs to be in each section.
Suggested care home business plan template
Click the links to jump to each section.
- Executive summary
- Corporate structure and experience
- Customers & market
- Goals & opportunities
- SWOT analysis
- Financial objectives
An executive summary is given at the start of your business plan, but is usually written when you complete every other section. That’s because it summarises the key points of your plan and outlines the opportunity in brief for lenders or other readers to quickly get up to speed.
When you’re writing an executive summary, keep things short and to the point. It’s an opportunity to win attention and interest – but many readers will skip over any lengthy segments. Try to experiment with short sentences and plenty of paragraph breaks or bullet points.
Ultimately, your summary should present a section-by-section overview of what the plan contains and what each section’s main issues, challenges and opportunities are. With that in mind, you really do need to leave it until last.
Corporate structure and experience
This is a critical part of your residential care home business plan, as specialist lenders look for prior care experience in making their decisions. If you’re an ex-care manager looking to buy your first home, you should demonstrate your experience and history in the sector.
If you don’t have senior care experience, use what you do have but also consider bringing in a partner to act as the appointed care manager of the business. Having more experience in the sector will improve your chances of securing finance.
For those buyers who already own a care home, securing investment for the second or any subsequent opportunities should be easier provided you can show a strong track record of both care experience and business growth.
You should also outline your corporate structure and potential employee roster, as that will be another key factor for the lender’s decision-making process. If, for example, your care home purchase includes retaining a team of expert care workers, potential investors will have added confidence.
Customers & market
The customers and market section of a traditional business plan is about assessing the overall size of your potential market and identifying customer types. For care home plans specifically, your customers tend to be a fixed market as they are elderly people either self-funding or utilising public funding to pay for their care.
However, you should still consider this section with a business mindset. Answer questions such as:
- How many total beds does the care home currently have? Is there potential for additional beds or rooms? Properties with fewer beds may fail to attract investment, so consider pivoting and starting a children’s care home where there are generally fewer residents.
- What CQC ratings and reviews does the home have – do you anticipate being able to improve this and therefore increase potential customers?
- What demographics populate the local area? A care home in a desirable, densely populated area will command higher prices than one in a more remote location.
- What does the care home market currently look like? Are there any changes to legislation or regulations that may impact your business?
Goals & opportunities
Use this section to make the goals of your business clear. Outline what they are, how you intend to achieve them and what metrics can be tracked to ensure you stay accountable to them. For example, increasing the overall reputation of the care home by securing greater CQC ratings may be your goal - but you’ll also need to give some indication as to how you’ll manage that feat.
Opportunities are more speculative and based on potential ways you can improve profitability. For example, an opportunity to use disused land on the site you’re buying to build extra bedrooms or a new specialist nursing service you could add via a skilled team member you intend to recruit.
The majority of improvements should focus on ways you can tangibly increase the amount of beds in your care home, or secure greater occupancy rates, as both of these things will be most responsible for your income and therefore of the greatest interest to lenders.
A SWOT analysis stands for ‘strengths, weaknesses, opportunities and threats’. In this section, you’ll assess each of these factors in the context of your care home business planning. That means considering the:
- Strengths of the business, such as your own experience, strong CQC ratings or occupancy figures etc.
- Weaknesses such as poor hygiene ratings, lack of visitor parking spaces etc.
- Opportunities to improve such as expanding premises or upgrading facilities.
- Threats to the business such as a rival care home nearby or regulatory changes that may limit how your residents are able to pay for care.
Work with an accountant or business specialist to create a financial projection and targeting section of your business plan. Here you’ll outline the most important aspect of your business for any investor – your finances. This includes estimated revenue, costs and overall profits as well as projections built around speculative improvements you may make.
You’ll also use this section to outline your plans for how you’ll utilise investment and fund the business. This will give lenders added reassurance that you have correctly accounted for repayments and understand the process by which finance is granted.
Of course, not everyone does understand the financing system. Our team here at Rangewell is happy to help guide you through the entire process, so you’ll be better prepared to fill out this part of your business plan and increase your chances of a successful application.
In the majority of residential care home business plans, marketing tends to be a lesser consideration. However, by showing your understanding of how you’ll market the business, you’ll help win investor confidence.
This section should outline your main marketing activities and how you’ll fund them. That means which channels you’ll use (such as print media advertising, radio, digital etc) and who will perform the activity (a marketing agency, an employee in the business etc.)
Planning out your marketing activities at this early stage also helps ensure you remain on track once the business is live. Marketing can be expensive, so incorporating a plan early will help control costs.
Business Plan For Elderly Care Home PDF Examples
The best way to ascertain what needs to go into a plan is to look at other care home business plan examples. While we do not officially support any other business plans or have affiliation with any of these companies, here are two useful examples of residential care business plans for UK owners.
- Colne Valley Equitable Care Society Business Plan - an excellent example of a business plan, though it covers a broader scope than a single home.
- Homecare LTD - this may be outdated but it’s a striking plan that fully outlines the business.
- Friends Together Care Homes LTD - outdated, but a relevant example though this is focused on children’s care.
You’ve now got everything you need to create your own business plan that outlines the future of your business and helps attract investment. Work with Rangewell and we’ll help you refine your approach to care home finance.
We’ll help you navigate the lender’s market and tailor your application for the best chances of success. Better still, our expert care home finance team don’t charge a fee for our advice – we’re always happy to help. Get in touch to learn more.