Thinking of Opening a New Assisted Living or Similar Business in the New Year? 5 Steps Toward Success
Are you thinking of opening a new assisted living or similar business in 2023? Our attorneys provide suggestions on five steps to get your business off to a good start based on what we have observed with our successful clients.
5 Steps to Success:
Conduct market research and create a business plan.
This includes identifying your target market, analyzing the competition, and outlining your unique selling proposition and financial projections. Do not get stuck on this step! Some research is required, but you should not fall into paralysis by analysis.
On the other hand, buying an off-the-shelf business plan will not help unless you modify that plan to truly make it your own. Assisted Living and other residential congregate housing models are person-centric businesses, and the unique background of the owners and management staff is highly relevant. Although a healthcare background is not needed, being able to identify the resources you will use to provide assistance with daily living activities is critical to your plan. For those healthcare professionals who are attracted to this business, crafting financial projections may be a new area that you will have to get comfortable with in order to meet your income goals.
2. Secure funding.
This could include getting a loan, seeking out investors, or using personal savings. If seeking out investors, be cautious not to violate state or federal securities laws. You may want to consider the following approaches:
Friends and family funding: This involves raising money from people you know, such as friends and family members.
Bootstrapping: This involves using personal savings and/or credit cards to finance the business.
Crowdfunding: This involves raising money from a large number of people, typically via the internet.
Angel investors: This involves raising money from wealthy individuals who are willing to invest in the business.
Venture capital: This involves raising money from venture capital firms that invest in high-growth startups.
Business loans: This involves borrowing money from banks or other financial institutions to finance the business.
Incubator/Accelerator programs: This involves joining an incubator/accelerator program that provides funding, mentoring, and other resources to startup businesses.
When raising funds from investors, it's important to comply with registering your securities offering with the SEC, or finding an exemption. If an exemption from registration applies, you should still disclose all material information about the business to potential investors. It's advisable to consult with a lawyer specializing in securities laws to ensure compliance. Pinkowski Law & Policy Group has connections with securities law firms in several states to be able to assist its clients with navigating fundraising regulations.
3. Build a team.
This includes hiring employees or contractors, as well as building partnerships and relationships with suppliers or service providers. Assisted Living operators will want to cultivate relationships with DME suppliers; referral agents; hospice services; caregiving training programs; and local church organizations, senior centers, and estate planning attorneys, among other third parties. You’ll want to make sure that the staff you hire has valid documentation required by your state licensing agency, and will be both competent and caring. Understand competitive salaries in your area and avoid stumbling upon discriminatory questions in your application process.
4. Develop your product or service.
This includes refining and implementing your business plan, and locking-in the location and necessary licenses for the services you will be offering. Only obtain the furnishings and equipment required to start. You will add more as your business grows. Find a mentor or hire a consultant. If you are expanding your portfolio, determine if your new location will be an extension of your current services, or offer a specialized or unique service. Register your LLC or other business entity if you have not already done so, and obtain your federal tax ID number. Get quotes to bind your liability and workers compensation insurance.
5. Market and promote your business.
Create a logo that encompasses your brand. Develop a website and social media presence and explore advertising and public relations to reach your target market. Consider registering your trade name with your Secretary of State. Join industry organizations, such as RALNA, as well as your specific statewide assisted living organization, in order to stay informed about assisted living trends, new regulations, and educational and networking opportunities.
The information herein is intended to be educational and an introduction to the subject matter presented. Despite any statutory or regulatory references cited in the article above, it is NOT specific legal advice to be relied upon for specific individual circumstances. Contact your own legal professional or reach out to our firm if you would like specific advice on this topic.
Look for additional blog posts on topics of interest to Assisted Living and Behavioral Health operators. We welcome topic suggestions! Write to info@pinkowskilaw.com if you are curious to learn more about a certain topic impacting assisted living or other group housing concerns.