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What to consider when extending care home services
James Thomas, QFP, Commercial Manager at d&t business planning, discusses the need for careful planning when extending care home services.
The expansion of care home services requires the mitigation of risk through analysis and proper planning both to protect the business and those it cares for long term.
Extending an existing facility by nature often requires significant investment and therefore, commercial backing. Securing appropriate funding will be a key part of the successful expansion of services. Here, a balance needs to be struck between the need for borrowing and the income likely to be generated from providing care services.
An independent funding sourcing organisation that has relationships with all the main banks, satellite lenders and funding circles will be able to secure the best deal possible. A funding sourcing organisation will initially undertake a viability check prior to approaching any lenders, in order to assess the likelihood of securing borrowing. They will look at an individual’s or company’s background, assets and liabilities and the business idea. Because they understand the criteria for lending from numerous financial organisations, they can help set expectations. Here it is important to provide accurate information to ensure a realistic evaluation and assessment. Armed with this information, they can select the most appropriate lender to potentially back the project.
To secure any business borrowing it will be necessary to provide a detailed business plan. This is a document setting out goals for the future and the strategy to reach those objectives. It will need to include information on cash flow, budgets and projections, but also an analysis of strengths, weaknesses, opportunities and threats.
Business plans should be realistic and achievable using existing financial records to help with forecasting. They should also detail milestones and set out a roadmap indicating thresholds when, for example, additional staff can be taken on, or when the business can afford to expand further.
The starting point with any business expansion plan is analysis of existing figures. So, step one of the process of expansion is to ensure accounts are fully up to date. Getting to grips with the technology to enable regular reporting online will be something everyone needs to get used to and we recommend getting in the habit of keeping your information up to date so you are ready to complete the quarterly submissions when they are required.
Key performance indicators (KPIs) are also an essential part of business planning. Monthly Turnover, Cost of Sales and Gross Profit will always be the most important key performance indicators, as at a glance, you get a good idea of how a business is performing at a high level. There will, of course, be some more specific metrics that are tracked behind these, which might include for example: variable and fixed costs such as staffing, training, recruitment, heating, cleaning, marketing, etc…
Tracking back KPIs helps with planning. Consider a target of increasing residents in a care home by 30%. Work back and isolate what can directly affect the goal and monitor these metrics.
• 30% growth = 10 more residents = 5 more staff, 10 more beds, 5 more items of equipment etc
The same logic can be applied to marketing. How many leaflets and adverts are needed to create xx number of enquiries which ultimately become xx number of residents?
So, whether you’re starting out, looking to grow, or an existing business, raising finance requires a workable and detailed plan tailored to your goals. This will help you source funding from the most suitable lender, and using an independent funding expert will help you shop around and secure the best deal for carefully managed expansion.