1.0 Executive Summary
The purpose of this business plan is to secure $2,000,000 via debt capital for the development of a 15-bed assisted living facility based in phoenix, Arizona. Caring Hands Phoenix LLC will provide the greater Maricopa County area with a comprehensive facility that attends to the needs of older people as well as individuals with developmental disabilities. The company’s founder is Matthew Deutsch. Full scale revenue generating operations are expected to commence later this year once the facilities have been acquired and renovated.
The Services
The primary revenue center for the business will come from the ongoing care that the Company will provide to senior citizens and individuals with developmental disabilities that are based in the greater Maricopa County area. Given the substantial demand for these types of services within this market, Management fully expects that the facilities will be at near 100% capacity by the end of the first year of operation. The Company will charge $7,500 per month per resident.
In regards to amenities, the business will provide each resident with their own room as well as ongoing meal service. The Company will strive to provide a wide range of engaging entertainment for residents.
The Company will employ a facility director as well as numerous assisted living aids that will assist residents with their day-to-day lives at Caring Hands Phoenix. Beyond these staff members, the business will retain a number of medical professionals that can be called upon in the event of emergency.
The services offered by Caring Hands Phoenix will be further discussed in the third section of the business plan.
The Financing
At this time, the company is seeking $2,000,000 via a commercial business loan in order to commence operations. The Founder will contribute $250,000 towards the venture. This document assumes that the business will receive a 25-year loan carrying a 7.5% interest rate due on the outstanding principal balance. The loan will amortize normally.
If necessary, Caring Hands Phoenix could easily secure additional capital to support its operations. This may include a working capital line of credit that can help manage the Company’s cash flow. However, this document assumes that the business will not secure any further funding outside of the capital sought in this plan.
The Future
As noted above, management expects that full occupancy will occur by the twelfth month of operation. Given the substantial population density and wealth of the greater Maricopa County area, there is immense demand among families to have their loved ones they have facilities that can provide proper and round the clock care. After the fifth year of operation, the Company may establish additional locations within this market using the accrued profits of the business.
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
As noted in the executive summary, Caring Hands Phoenix is seeking $2,000,000 in order to establish operations. The funds are to be used as follows:
The Owner will contribute $250,000 towards the venture. It should be noted that the real estate will be directly owned by the company.
2.2 Investor and Management Equity
At this time, the Company is not seeking an equity investment from a third party. Matthew Deutsch will retain a 100% ownership interest in the business
2.3 Board of Directors Composition
Mr. Deutsch will serve as the sole director of Caring Hands Phoenix LLC.
2.4 Exit Strategies
In the event that it is financially prudent to do so, a qualified business broker will be hired to market Caring Hands Phoenix to a potential buyer. Prior to this occurring, the business will have a formal valuation completed which will include a full analysis of the value of the underlying real estate. It is expected that if the business is to be sold, the Company will receive a premium equal to five times the previous year’s earnings.
3.0 Assisted Living Services
As discussed in the executive summary, Caring Hands Phoenix will be actively involved with providing a wide range of supported care on a round the clock basis for people within the greater Phoenix metropolitan area and Maricopa County. The location will feature 15 rooms that will allow for individuals to enjoy a substantial degree of privacy while they are residents of the facility. The company will charge $7,500 per month as the rental fee, which will include all meals.
The Company’s staff will consist of a facility director, who will be a registered nurse, as well as assisted living facility aids. The Company will provide a wide range of training for these individuals so that they properly care of residents.
As noted earlier as well, the Company will retain a number of medical professionals that can be called upon in the event of an emergency or for resident needs specialized care. The Company will maintain proper records regarding all meal served as well as other general information about each resident which can be shared with their primary care physician. As an ancillary benefit to residents, the business will provide transportation to and from their doctors’ offices. This will provide a substantial differentiating factor for Caring Hands Phoenix LLC.
4.0 Overview of the Organization
4.1 Registered Name
Caring Hands Phoenix LLC. The business is registered as a limited liability company in the State of Arizona.
4.2 Commencement of Operations
Caring Hands Phoenix will launch full scale operations in the fourth quarter of this year.
4.3 Mission Statement
To provide compassionate, round the clock care at an affordable rate for people within the greater Phoenix metropolitan area.
4.4 Vision Statement
Caring Hands Phoenix anticipates that it will become one of the premier assisted living facilities within the state of Arizona.
4.5 Organizational Objectives
• Properly renovate the facilities within a six-month period once the capital has been secured.
• Establish ongoing relationships with medical professionals that provide referrals for families that need assisted living care for their loved ones.
• Remained within the letter of the law regarding all assisted living services rendered.
• Implement a wide-ranging marketing campaign that will draw the attention of the general public throughout Maricopa County.
• Properly allocate a significant portion of the Company’s after tax profits for expansion purposes including the potential development of a second location after the fifth year of operation.
• Maintain an expansive online presence through a proprietary website as well as through social media marketing.
5.0 Strategic and Market Analysis
5.1 External Environment Analysis
This section of the analysis will focus on the current economic climate, the assisted living facility industry, the customer profile, and the ongoing competition that Caring Hands Phoenix will face moving forward.
At this time the economic climate within the United States is moderate. There has been a significant degree of volatility given the ongoing changes to global trade policy. This may contribute to higher inflation in the coming years period however, the US Federal Reserve as well as major global central banks are taking appropriate measures to reduce inflationary risks.
However, any issues with the economy will not impact the Company’s ability to generate revenue remaining profitable. The Company is operating within Maricopa County, which is immensely population dense. The demand for assisted living care within this area is enormous, and the Company will be able to find an immense audience of families that are seeking affordable assisted living care options for their loved ones.
5.2 Industry Analysis
There are 128,000 assisted living facilities within the United States. In each of the last five years, industry revenues have exceeded $95 billion. The industry employs 990,000 people.
This industry is expected to grow at a rate that is faster than that of the general economy. As more individuals from the Baby Boomer generation enter their later years, they will be required to have a greater degree of care especially if they have certain medical conditions that require round the clock supervision. Caring Hands Phoenix is in a strong position to capitalize on this demand in the coming years.
5.3 Customer Profile
Admittedly, the demographics that the business will be able to target for its assisted living facility operations are broad. Any family member that has an individual that is older or has a developmental disability and requires assisted living care is a potential client for the business. Generally speaking, most families that enroll their loved ones within the assisted living care facility will typically have a household income exceeding $100,000. It should be noted that many individuals that will enroll in assisting living care will be of older age and will be able to use their savings as well as income from publicly funded systems to afford their monthly fees.
5.4 Competition
As this business plan has been created to be shown only as a sample, no formal competitive analysis has been completed specifically for the Maricopa County market. If this was a business plan that was for an actual assisted living facility, we would have completed an extensive analysis of all competitors in a 10-mile radius of Caring Hands Phoenix. This analysis would include the number of rooms that each competitor has, their monthly fees, as well as competitive advantages that the company will maintain over area competition.
6.0 Key Strategic Issues
6.1 Sustainable Competitive Advantage
The Company will be able to maintain successful business operations because of the following:
• As compared to the incomes of the greater Phoenix metropolitan area, the services provided by Caring Hands Phoenix are affordable.
• Substantial demand within the market among families that are seeking proper places that could provide round the clock care for their family members.
• A highly experienced owner, Matthew Deutsch, who will be able to properly guide the operations of the business to profitability over the next five years.
• This service is offered by the company will remain in demand at all times.
• In certain instances, the business may be able to receive reimbursement from insurance companies who are publicly funded healthcare systems based on the underlying condition that requires the individual to be placed in assisted living care.
6.2 Basis for Growth
Caring Hands Phoenix will grow through two potential avenues:
• Ongoing marketing of the business until the company reaches 100% capacity, which is expected to occur by month twelve of operation.
• Development of additional facilities throughout the greater Maricopa County area.
7.0 Marketing Plan
7.1 Marketing Objectives
• Establish ongoing relationships with medical professionals or will provide referrals when needed among their patients that require round the clock supervision.
• Maintain an expansive online presence that uses multiple marketing channels to promote brand name visibility.
• Engage in traditional advertising within the greater Maricopa County area.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• Caring Hands Phoenix will launch its operations.
• Anticipated revenues will reach $1.29 million.
Year 2
• Expected revenue will reach $1.39 million.
• At the start of this year, 100% occupancy will be achieved.
Years 3-5
• The Company will continue to raise its rates by 6% per annum.
• Revenues in year five will reach $1.75 million.
• At this time, the Company may establish additional locations throughout Arizona.
7.4 Marketing Strategies
The Company will use a number of marketing strategies that will ensure substantial brand name visibility for Caring Hands Phoenix as it is establishes its operations within this market. Most importantly, the Company will establish its marketing operations during the course of the development. This will include direct outreach with medical professionals as well as mental health care professionals that will provide referrals among individuals who will be able to immediately obtain residency within the facilities once the development phase is completed. Given the substantial demand for assisted living care within the greater Phoenix metropolitan area, it is fully expected that there will be a number of residents ready to enter the facility once it is finalized.
Caring Hands Phoenix will maintain an expansive online presence via a proprietary website. This platform will showcase the rooms, amenities, fees, and general information about the business. This platform will also undergo search engine optimization specific for the greater Phoenix metropolitan area as well as Maricopa County as a whole.
To complement the Company’s website, the business will maintain a presence on social media platforms to ensure that any vacancies can be quickly filled. On the Company’s social media pages, images of the location will be shown. The Company’s contact information will also be featured on these platforms.
During the development phase, the business will take out full page and half page advertisements among lifestyle publications and newspapers that circulate throughout the greater Phoenix metropolitan area. These advertisements will focus on the grand opening date of the facilities and how a family can contact the business in order to have their loved one placed in the care of the Company. Once the business reaches maximum capacity, the business will no longer conduct these operations until a vacancy occurs.
8.0 Organizational Plan
8.1 Corporate Organization
8.2 Organizational Budget
9.0 Financial Plan
9.1 Underlying Assumptions
• The Company will acquire $2,000,000 to establish operations.
• The loan will carrying a 7% interest rate and a 25-year term.
• The business will achieve an annual revenue growth rate of 7.2%.
9.2 Financial Highlights
• Moderate fixed operating costs as a function of income will ensure the economic stability of the business.
• Profitability in each year of operation.
9.3 Sensitivity Analysis
The Company’s revenues are not sensitive to negative changes in the economy. This is due to the fact that families that have older members or individuals with disabilities require these services on an ongoing basis. For many families, especially with individuals that have very challenging care needs, use of an assisted living facility is an absolute necessity. Furthermore, Caring Hands Phoenix will generate highly recurring streams of revenue from its operations which will further contribute to the ongoing economic stability of the business.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• The business will generate substantial contribution margins from all assisted living care services rendered.
• The company is operating in the population dense area of phoenix and Maricopa County.
• Although there is significant competition in this market, the supply of available living facilities it’s substantially lower than current demand.
• The Company’s revenues are highly recurring in nature, which will ensure the economic stability of the business as well as a significant return on investment.
Weaknesses
• Ongoing competition from existing this is the new facilities within this market.
• Substantial expenditures as it relates to payroll.
Opportunities
• Establish additional assisted living facilities within the greater Maricopa County market.
• Continued marketing of the business until 100% capacity is achieved, which is expected to occur by the end of the first year of operation.
Threats
• Ongoing inflation could cause the operating cost of the business to increase.
• Potential injuries that can occur at the facilities may cause legal liabilities for the business although this is a muted risk given the insurance policies in place coupled with extensive training procedures for all staff members.
Appendix B – Risk Analysis
Development Risk – Low
The service architecture of Caring Hands Phoenix has been developed. The primary development risk will come Once the facilities are complete and the Company needs to market its services to the Maricopa County general public.
Financing Risk – Low/Moderate
The $2,000,000 of capital sought in this document will be principally used for the acquisition of real estate. The ongoing risks related to this financing are subdued by the fact that Caring Hands Phoenix will generate highly recurring streams of revenue from the ongoing assisted living facility services outlined in this document.
Marketing Risk – Moderate
Given the immense demand for assisted living facilities within the Maricopa County area, the business will only need to engage in modest advertising in order to achieve 100% capacity by the end of the first year of operation. The business will use the marketing strategies outlined in the seventh section of this document to achieve these goals. These risks will be further tempered by the direct outreach that the company will conduct with medical professionals within the market.
Valuation Risk – Minimal
The valuation risk is offset by:
• A significant portion of the capital sought in this document will be used for tangible asset purchases.
• The Company will generate recurring fees on a monthly basis.
Exit Risk – Very Low
As noted earlier, if it is financially prudent to do so the company will work with a qualified business brokerage in order to market Caring Hands Phoenix to a buyer. This event is not expected to occur for a significant period of time given that Mr. Deutsch wants to develop a number of assisted living facilities within phoenix as well as other major areas of Arizona. The ongoing profits from this initial facility will facilitate this growth.
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