Risks of starting an assisted living business
Three major risks of the business. Any one (or three) are capable of blowing a hole in business’s profitability.
1. Labor costs
The single biggest cost for an assisted living home is labor. Were I to open a home, I would need to pay caretakers around the clock. Either that, or I would be the overnight caretaker. At least in the early days, I’d be chained to the business.
Many assisted living homes are family-run businesses. That means mom, dad, adult children, and extended family members alternate as caretakers. This type of arrangement minimizes wages paid (including overtime).
Other homes make use of volunteer labor. Volunteers don’t do the caretaking, but they do provide other services for the residents (e.g., entertainment) that make caretaking easier. In some cases, high school and college students can earn course credit by volunteering at an assisted living home.
2. Limited pool of prospects
The monthly cost of an assisted living home—$3K and up—rules out the vast majority of the senior population as prospects. Most seniors cannot afford anything more than a short stay in an assisted living home.
Unlike nursing homes, assisted living homes generally do not accept Medicaid or other government funding. They pay cash from their savings, or they sell their house in order to afford monthly payments. Which leads to the third risk…
3. Fierce competition
A small pool of prospects means intense competition for every resident at an assisted living home. Typically, the family of a resident looks at two, five, even ten homes before making a decision. That means always selling, always being “on,” and hopefully, always closing.
Many assisted living homeowners are nurses or nursing assistants. They have a deep reverence for the elderly and take excellent care of them. However, these same compassionate people sometimes feel dirty or unethical trying to close customers.
So to keep their pipeline full, assisted living homeowners often rely on the referral agencies. These agencies charge a fee for every resident who moves in. Residential turnover is unpredictable and often high, regardless of satisfaction level (for example, instances such as death or illness). Which means an owner may pay multiple fees for the same bedroom in one year. Not surprisingly, owners come to resent these agencies.
Innovations are making it easy to share your room availability.
Sharing your available rooms does not have to be difficult. Save time and keep your availability up to date 24/7 so you can be found easily when you have availability and your referral sources are looking in your area. Expand your referral sources and join Realtime Senior Living to share you availability 100% easier. Go to www.RealtimeSeniorLiving.com to learn more and start today.