How to write a business plan for a nursing home?

nursing home business plan

Creating a business plan for a nursing home is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating a nursing home business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

In this guide:

Why write a business plan for a nursing home?

  • What information is needed to create a business plan for a nursing home?
  • What goes in the financial forecast for a nursing home?
  • What goes in the written part of a nursing home business plan?
  • What tool can I use to write my nursing home business plan?

Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write a nursing home business plan in the first place.

To have a clear roadmap to grow the business

It's rarely business as usual for small businesses. The economy follows cycles where years of growth are followed by recessions, and the business environment is always changing with new technologies, new regulations, new competitors, and new consumer behaviours appearing all the time...

In this context, running a business without a clear roadmap is like driving blindfolded: it's dangerous at best. That's why writing a business plan for a nursing home is essential to create successful and sustainable businesses.

To write an effective business plan, you will need to take stock of where you are (if you are already in business) and where you want the business to go in the next three to five years.

Once you know where you want your nursing home to be, you'll have to identify:

  • what resources (human, equipment, and capital) are needed to get there,
  • at what pace the business needs to progress to get there in time,
  • and what risks you'll face along the way.

Going through this process regularly is beneficial, both for startups and existing companies, as it helps make informed decisions about how best to allocate resources to ensure the long-term success of the business.

To maintain visibility on future cash flows

Businesses can go for years without making a profit, but they go bust as soon as they run out of cash. That's why "cash is king", and maintaining visibility on your nursing home's future cash flows is critical.

How do I do that? That's simple: you need an up-to-date financial forecast.

The good news is that your nursing home business plan already contains a financial forecast (more on that later in this guide), so all you have to do is to keep it up-to-date.

To do this, you need to regularly compare the actual financial performance of your business to what was planned in your financial forecast, and adjust the forecast based on the current trajectory of your business.

Monitoring your nursing home's financial health will enable you to identify potential financial problems (such as an unexpected cash shortfall) early and to put in place corrective measures. It will also allow you to detect and capitalize on potential growth opportunities (higher demand from a given segment of customers for example).

To secure financing

Crafting a comprehensive business plan for your nursing home, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.

Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.

For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).

Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your nursing home has the potential for healthy growth, profitability, and consistent cash flow generation over time.

Now that you understand the importance of creating a business plan for your nursing home, let's delve into the necessary information needed to craft an effective plan.

Information needed to create a business plan for a nursing home

You need the right data in order to project sales, investments and costs accurately in the financial forecast of your nursing home business plan.

Below, we'll cover three key pieces of information you should gather before drafting your business plan.

Carrying out market research for a nursing home

As you consider writing your business plan for a nursing home, conducting market research becomes a vital step to ensure accurate and realistic financial projections.

Market research provides valuable insights into your target customer base, competitors, pricing strategies, and other key factors that can significantly impact the commercial success of your business.

Through this research, you may uncover trends that could influence your nursing home.

You may discover that older adults are increasingly interested in living in nursing homes that provide more amenities and services. They might be looking for facilities that offer a wide range of activities and programs to keep them engaged and entertained. Another trend that market research could reveal is that older adults may be more likely to choose nursing homes with an emphasis on healthy and nutritious meals. They could also be looking for homes that provide specialized care for those with chronic conditions or disabilities.

Such market trends play a significant role in forecasting revenue, as they offer valuable data about potential customers' spending habits and preferences.

By incorporating these findings into your financial projections, you can present investors with more accurate information, helping them make informed decisions about investing in your nursing home.

Developing the sales and marketing plan for a nursing home

Budgeting sales and marketing expenses is essential before creating a nursing home business plan.

A comprehensive sales and marketing plan should provide an accurate projection of what actions need to be implemented to acquire and retain customers, how many people are needed to carry out these initiatives, and how much needs to be spent on promotions, advertising, and other aspects.

This helps ensure that the right amount of resources is allocated to these activities in order to hit the sales and growth objectives forecasted in your business plan.

The staffing and equipment needs of a nursing home

Whether you are at the beginning stages of your nursing home or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.

To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.

A nursing home might incur staffing costs such as hiring nurses, certified nursing assistants, and other healthcare personnel to provide care for residents. It might also incur costs for equipment such as medical beds, wheelchairs, and other medical supplies needed to provide care for the residents.

To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.

Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your nursing home.

What goes into your nursing home's financial forecast?

The objective of the financial forecast of your nursing home's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a nursing home are:

  • The profit and loss (P&L) statement ,
  • The projected balance sheet ,
  • The cash flow forecast ,
  • And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a nursing home shows how much revenue and profits your business is expected to generate in the future.

projected profit and loss statement example in a nursing home business plan

Ideally, your nursing home's P&L statement should show:

  • Healthy growth - above inflation level
  • Improving or stable profit margins
  • Positive net profit

Expectations will vary based on the stage of your business. A startup will be expected to grow faster than an established nursing home. And similarly, an established company should showcase a higher level of profitability than a new venture.

The projected balance sheet of your nursing home

The balance sheet for a nursing home is a financial document that provides a snapshot of your business’s financial health at a given point in time.

It shows three main components: assets, liabilities and equity:

  • Assets: are resources owned by the business, such as cash, equipment, and accounts receivable (money owed by clients).
  • Liabilities: are debts owed to creditors and other entities, such as accounts payable (money owed to suppliers) and loans.
  • Equity: includes the sums invested by the shareholders or business owners and the cumulative profits and losses of the business to date (called retained earnings). It is a proxy for the value of the owner's stake in the business.

example of projected balance sheet in a nursing home business plan

Examining the balance sheet is important for lenders, investors, or other stakeholders who are interested in assessing your nursing home's liquidity and solvency:

  • Liquidity: assesses whether or not your business has sufficient cash and short-term assets to honour its liabilities due over the next 12 months. It is a short-term focus.
  • Solvency: assesses whether or not your business has the capacity to repay its debt over the medium-term.

Looking at the balance sheet can also provide insights into your nursing home's investment and financing policies.

In particular, stakeholders can compare the value of equity to the value of the outstanding financial debt to assess how the business is funded and what level of financial risk has been taken by the owners (financial debt is riskier because it has to be repaid, while equity doesn't need to be repaid).

The projected cash flow statement

A cash flow forecast for a nursing home shows how much cash the business is projected to generate or consume.

example of cash flow forecast in a nursing home business plan

The cash flow statement is divided into 3 main areas:

  • The operating cash flow shows how much cash is generated or consumed by the operations (running the business)
  • The investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.)
  • The financing cash flow shows how much cash is raised or distributed to investors and lenders

Looking at the cash flow forecast helps you to ensure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.

It is also a best practice to include a monthly cash flow statement in the appendices of your nursing home business plan so that the readers can view the impact of seasonality on your business cash position and generation.

The initial financing plan

The sources and uses table or initial financing plan is a key component of your business plan when starting a nursing home.

It shows where the capital needed to set up the business will come from (sources) and how it will be spent (uses).

sources and uses table in a nursing home business plan

This table helps size the investment required to set up the nursing home, and understand how risks will be distributed between the business owners, and the financiers.

The sources and uses table also highlights what the starting cash position will be. This is key for startups as the business needs to have sufficient funding to sustain operations until the break-even point is reached.

Now that you have a clear understanding of what will go into the financial forecast of your nursing home business plan, let's have a look at the written part of the plan.

The written part of a nursing home business plan

The written part of a nursing home business plan is composed of 7 main sections:

  • The executive summary
  • The presentation of the company
  • The products and services
  • The market analysis
  • The strategy
  • The operations
  • The financial plan

Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.

Let's go through the content of each section in more detail!

1. The executive summary

The executive summary, the first section of your nursing home's business plan, serves as an inviting snapshot of your entire plan, leaving readers eager to know more about your business.

To compose an effective executive summary, start with a concise introduction of your business, covering its name, concept, location, history, and unique aspects. Share insights about the services or products you intend to offer and your target customer base.

Subsequently, provide an overview of your nursing home's addressable market, highlighting current trends and potential growth opportunities.

Then, present a summary of critical financial figures, such as projected revenues, profits, and cash flows.

You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.

Lastly, address any funding needs in the "ask" section of your executive summary.

2. The presentation of the company

In your nursing home business plan, the second section should focus on the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.

Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.

When describing the location of your nursing home, you could highlight its potential for growth. It may be in an area that is rapidly expanding, with a diverse population and a strong economy. You could also emphasize how it is positioned in a convenient location that is easily accessible by public transportation, and that it is close to hospitals and other health care facilities. Additionally, you might point out the potential for a larger customer base, as well as the opportunity to attract a broad range of customers from a variety of backgrounds.

Finally, you should introduce your management team. Describe each member's role, background, and experience.

Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.

3. The products and services section

The products and services section of your nursing home business plan should include a detailed description of what your company sells to its customers. 

For example, your nursing home might offer 24 hour medical care, physical therapy, and counseling services to its customers. These services provide the elderly with access to medical care at any time, helping them to maintain their health and independence. Physical therapy is important for elderly individuals to remain active and maintain mobility, while counseling services provide emotional support and mental health care. These services are essential for the elderly to continue living a healthy and enjoyable life.

The reader will want to understand what makes your nursing home unique from other businesses in this competitive market.

When drafting this section, you should be precise about the categories of products or services you sell, the clients you are targeting and the channels that you are targeting them through. 

4. The market analysis

When outlining your market analysis in the nursing home business plan, it's essential to include comprehensive details about customers' demographics and segmentation, target market, competition, barriers to entry, and relevant regulations.

The primary aim of this section is to give the reader an understanding of the market size and appeal while demonstrating your expertise in the industry.

To begin, delve into the demographics and segmentation subsection, providing an overview of the addressable market for your nursing home, key marketplace trends, and introducing various customer segments and their preferences in terms of purchasing habits and budgets.

Next, shift your focus to the target market subsection, where you can zoom in on the specific customer segments your nursing home targets. Explain how your products and services are tailored to meet the unique needs of these customers.

For example, your target market might include elderly individuals who are in need of long-term care and support. This could include people who can no longer live independently, and need help with activities such as bathing, cooking, and dressing. Additionally, it could include people who require medical services such as physical, occupational, and speech therapy.

In the competition subsection, introduce your main competitors and explain what sets your nursing home apart from them.

Finally, round off your market analysis by providing an overview of the main regulations that apply to your nursing home.

5. The strategy section

When writing the strategy section of a business plan for your nursing home, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your nursing home could face a number of risks. For example, there may be a risk of a data security breach or a cyber attack. Such an incident could result in the loss of valuable information or the exposure of confidential resident data. Another risk your nursing home might face is a fire or other natural disaster. Such an event could cause serious damage to the facility and its residents, as well as disrupt operations.

6. The operations section

The operations of your nursing home must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your nursing home - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

You may have a number of key assets and IP as a nursing home. For example, you could have proprietary software that is used to manage patient records and medication schedules. Additionally, you might have patented medical devices or treatments that are exclusive to your facility. These assets are important to your operation and need to be protected.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we discussed earlier in this guide.

Now that you have a clear idea of what goes into a nursing home business plan, let's look at some of the tools you can use to create yours efficiently.

What tool should I use to write my nursing home's business plan?

In this section, we will be reviewing the two main solutions for creating a nursing home business plan:

  • Using specialized online business plan software,
  • Outsourcing the plan to the business plan writer.

Using an online business plan software for your nursing home's business plan

Using online business planning software is the most efficient and modern way to write a nursing home business plan.

There are several advantages to using specialized software:

  • You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
  • You are guided through the writing process by detailed instructions and examples for each part of the plan
  • You can access a library of dozens of complete business plan samples and templates for inspiration
  • You get a professional business plan, formatted and ready to be sent to your bank or investors
  • You can easily track your actual financial performance against your financial forecast
  • You can create scenarios to stress test your forecast's main assumptions
  • You can easily update your forecast as time goes by to maintain visibility on future cash flows
  • You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

Hiring a business plan writer to write your nursing home's business plan

Outsourcing your nursing home business plan to a business plan writer can also be a viable option.

Business plan writers are skilled in creating error-free business plans and accurate financial forecasts. Moreover, hiring a consultant can save you valuable time, allowing you to focus on day-to-day business operations.

However, it's essential to be aware that hiring business plan writers will be expensive, as you're not only paying for their time but also the software they use and their profit margin.

Based on experience, you should budget at least £1.5k ($2.0k) excluding tax for a comprehensive business plan, and more if you require changes after initial discussions with lenders or investors.

Also, exercise caution when seeking investment. Investors prefer their funds to be directed towards business growth rather than spent on consulting fees. Therefore, the amount you spend on business plan writing services and other consulting services should be insignificant compared to the amount raised.

Keep in mind that one drawback is that you usually don't own the business plan itself; you only receive the output, while the actual document is saved in the consultant's business planning software. This can make it challenging to update the document without retaining the consultant's services.

For these reasons, carefully consider outsourcing your nursing home business plan to a business plan writer, weighing the advantages and disadvantages of seeking outside assistance.

Why not create your nursing home's business plan using Word or Excel?

I must advise against using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write your nursing home business plan. Let me explain why.

Firstly, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is highly technical and requires a strong grasp of accounting principles and financial modelling skills. It is, therefore, unlikely that anyone will fully trust your numbers unless you have both a degree in finance and accounting and significant financial modelling experience, like us at The Business Plan Shop.

Secondly, relying on spreadsheets is inefficient. While it may have been the only option in the past, technology has advanced significantly, and software can now perform these tasks much faster and with greater accuracy. With the rise of AI, software can even help us detect mistakes in forecasts and analyze the numbers for better decision-making.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software makes it easier to compare actuals versus forecasts and maintain up-to-date forecasts to keep visibility on future cash flows, as we discussed earlier in this guide. This task is cumbersome when using spreadsheets.

Now, let's talk about the written part of your nursing home business plan. While it may be less error-prone, using software can bring tremendous gains in productivity. Word processors, for example, lack instructions and examples for each part of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they don't handle formatting for you.

Overall, while Word or Excel may seem viable for some entrepreneurs to create a business plan, it's by far becoming an antiquated way of doing things.

  • Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
  • A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
  • A business plan has 2 main parts: a financial forecast outlining the funding requirements of your nursing home and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your nursing home business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

  • How to write a business plan to secure a bank loan?
  • Key steps to write a business plan?
  • Top mistakes to avoid in your business plan

Do you know entrepreneurs interested in starting or growing a nursing home? Share this article with them!

Guillaume Le Brouster

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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How to Start a Nursing Home

start a nursing home

Starting a nursing home can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful nursing home.

Importantly, a critical step in starting a nursing home is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .

Download our Ultimate Business Plan Template here

14 Steps To Start a Nursing Home :

  • Choose the Name for Your Nursing Home
  • Develop Your Nursing Home Business Plan
  • Choose the Legal Structure for Your Nursing Home
  • Secure Startup Funding for Your Nursing Home (If Needed)
  • Secure a Location for Your Business
  • Register Your Nursing Home with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Nursing Home
  • Buy or Lease the Right Nursing Home Equipment
  • Develop Your Nursing Home Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Nursing Home
  • Open for Business

1. Choose the Name for Your Nursing Home

The first step to starting a nursing home is to choose your business’ name.  

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your nursing home:

  • Make sure the name is available . Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
  • Keep it simple . The best names are usually ones that are easy to remember, pronounce and spell.
  • Think about marketing . Come up with a name that reflects the desired brand and/or focus of your nursing home.

2. Develop Your Nursing Home Business Plan

One of the most important steps in starting a nursing home is to develop your nursing home business plan . The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  • Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your own assisted living facility.
  • Company Overview – this section tells the reader about the history of your nursing home and what type of nursing home you operate. For example, are you a long-term care facility, assisted living facility, or an independent living facility?
  • Industry Analysis – here you will document key information about the nursing home industry. Conduct market research and document how big the industry is and what trends are affecting it.
  • Customer Analysis – in this section, you will document who your ideal or target market are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
  • Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  • Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
  • Product : Determine and document what products/services you will offer 
  • Prices : Document the prices of your products/services
  • Place : Where will your business be located and how will that location help you increase sales?
  • Promotions : What promotional methods will you use to attract prospective customers to your nursing home? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
  • Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  • Management Team – this section details the background of your company’s management team.
  • Financial Plan – finally, the financial plan answers questions including the following:
  • What startup costs will you incur?
  • How will your nursing home make money?
  • What are your projected sales and expenses for the next five years?
  • Do you need to raise funding to launch your business

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3. choose the legal structure for your nursing home.

Next you need to choose a legal structure for your nursing home and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the owner of the nursing home and the business are the same legal entity. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a nursing home together. The partners share in the profits and losses of the business. 

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a nursing home include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a nursing home is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your nursing home, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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4. Secure Startup Funding for Your Nursing Home (If Needed)

In developing your nursing home business plan , you might have determined that you need to raise funding to launch your business. 

If so, the main sources of funding for a nursing home to consider are personal savings, family members and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a nursing home that they believe has high potential for growth.

5. Secure a Location for Your Business

The first step in finding a location for your nursing home is to decide what kind of environment you want for your nursing home residents. Do you want a rural setting with plenty of open space, or a more urban environment with easy access to medical care and other amenities?

Once you’ve decided on the environment, you’ll need to research the locations that fit your criteria. There are many online databases of nursing homes. You can also contact your state’s department of health for a list of licensed and skilled nursing facilities in your area.

Your next step is to take a tour of the homes on your list. The right location should feel like a home, not only for you but also for your potential residents and other employees.

6. Register Your Nursing Home with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

7. Open a Business Bank Account

It is important to establish a bank account in your nursing home’s name. This process is fairly simple and involves the following steps:

  • Identify and contact the bank you want to use
  • Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  • Complete the bank’s application form and provide all relevant information
  • Meet with a banker to discuss your business needs and establish a relationship with them

8. Get a Business Credit Card

You should get a business credit card for your nursing home to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

Assisted living facilities provide residence and care for the elderly population or disabled people who can’t live independently. To start a nursing home, you’ll need a business license and a permit to operate a healthcare facility. You’ll also need to meet several requirements for staff, patient care, and the facility itself.

If you live in a state that requires inspections, nursing facilities are licensed by each state’s department of health. In states where there isn’t a licensing requirement, nursing care facilities are regulated by the Centers for Medicare & Medicaid Services (CMS). Either way, you’ll need to obtain a license or a state permit.

In most cases, your facility will also need to meet requirements for staffing levels and staff training, patient care records, fire safety procedures, and building safety that are established by the state’s department of health or state legislature. In addition, nursing homes have federal standards they must follow including the CoP (Conditions of Participation), which details requirements for all healthcare facilities. All of these standards can be found on the CMS website.

If you plan to offer specialized care, such as a skilled nursing facility care for people with Alzheimer’s or dementia, your facility likely needs additional licensing or certification. For example, in order to receive reimbursement from Medicare or Medicaid, a facility that specializes in dementia care must be a Dementia Special Care Unit certified by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).

10. Get Business Insurance for Your Nursing Home

There are different types of insurance that are necessary for the operation of a nursing home. 

Nursing Home insurance policies that you should consider include:

  • General liability insurance : This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
  • Workers’ compensation insurance : This type of policy works with your general liability policy to protect against employee workplace injuries and accidents. It also covers employees’ medical expenses and lost wages.
  • Professional liability insurance : This protects your business against claims of professional negligence such as incorrect medication or medical treatment.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs. 

11. Buy or Lease the Right Nursing Home Equipment

To run your nursing home successfully on a day-to-day basis, you will need the following equipment: 

  • defibrillators
  • induction loops
  • wheelchairs/walking aids
  • wardrobes (for uniforms)
  • medical beds (of various sizes depending on the number of patients)
  • cots (for newborns or short-term stay patients)
  • medical records storage facilities
  • feeding equipment

The equipment that you need will vary depending on the size of your nursing home. You can run a small facility with less than fifty patients, but you still need to be able to provide round the clock care. A larger nursing home will need more staff members to keep it running smoothly.

12. Develop Your Nursing Home Marketing Materials

Marketing materials will be required to attract and retain customers to your nursing home.

The key marketing materials you will need are as follows:

  • Logo : Spend some time developing a good logo for your nursing home. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
  • Website : Likewise, a professional nursing home website provides potential customers with information about the services and/or medical care you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
  • Social Media Accounts : establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media platforms will help customers and others find and interact with your nursing home.

13. Purchase and Setup the Software Needed to Run Your Nursing Home

The software you need to run a nursing home may vary depending on the type of nursing home. In general you’ll need software that can track patient information and manage medication schedules. If you are running a long-term care facility, you may also need software that can track resident information and manage billing and payroll.

The software you need to run a nursing home will vary depending on the specific needs of your home, but some common options include electronic health records (EHR) software, patient tracking software, and nurse scheduling software.

14. Open for Business

You are now ready to open your nursing home. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

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How to Start a Nursing Home FAQs

Is it hard to start a nursing home.

Starting a nursing home can be difficult, but with the right planning and execution it can be a successful endeavor. There are a few key things you need to do in order to get your nursing home up and running: 

  • Plan your business carefully. This includes creating a comprehensive business plan and strategizing how you will market and run your nursing home. 
  • Find the right location for your home. You'll need to consider factors such as zoning, accessibility, and the needs of your target population. 
  • Establish good relationships with local healthcare providers. This will help you attract residents to your home and ensure that they receive quality care. 
  • Manage your finances carefully, including the hiring and training of staff members. 
  • Once you acquire residents, be sure to provide quality care and establish a strong culture within your home. By properly planning and executing these tasks, you will have a successful nursing home in no time.

How can I start a nursing home with no experience?

There are a few ways to start a nursing home with no experience. First, you may want to research the process and startup costs. You may also want to find a partner who has experience in the nursing home industry. Finally, you could also attend a seminar or workshop on starting a nursing home.

What type of nursing home is most profitable?

There is no one-size-fits-all answer to this question, as the profitability of nursing homes can vary depending on many factors. However, in general, for-profit nursing homes are often more profitable than nonprofit nursing homes. This is because for-profit nursing homes typically have lower overhead costs and can charge patients more for their services.

How much does it cost to start a nursing home?

The cost to start a nursing home can vary depending on the size and location of the home. Typically, startup costs can range from $200,000-$250,000 for a small nursing home business, with costs starting as high as $750,000 for a medium sized business. 

The following are some factors that contribute to startup costs in opening a nursing home: 

  • Initial licensing fees 
  • Building renovation and construction 
  • Equipment (necessary medical equipment, furniture, kitchen utensils) 
  • Landscaping (fencing, garden) 
  • Business license 
  • Advertisements 
  • State and federal survey compliance (filing fees) 
  • Professional services (architect/engineer/surveyor fees)
  • Insurance fees

What are the ongoing expenses for a nursing home?

The ongoing expenses for a nursing home can vary depending on the location and the services offered. However, some of the more common expenses include room and board, medications, medical supplies, physical therapy, and occupational therapy . Depending on the needs of the patient, these expenses can range anywhere from $6,000 to $10,000 per month.

How does a nursing home make money?

Nursing homes make money by providing room and board, medical care, and other services to residents. The cost of these services is usually more than the resident can pay out-of-pocket, so the nursing home collects payments from insurance companies, Medicaid or Medicare, or the resident's family. Some nursing homes also have income from investments or rental properties.

Is owning a nursing home profitable?

The nursing home industry is one of the most profitable industries in the United States. There are several reasons for this, including the following:

  • The demand for nursing homes is high. As the population ages, more and more people will need nursing home care.
  • The cost of nursing home care is high. This means that there is a lot of money for nursing home administrators to make in the industry.
  • The quality of nursing home care is often poor. This means consumers will pay higher prices for quality care.
  • Government healthcare programs pay for a lot of nursing home care. This allows nursing homes to receive money from the government.

Why do nursing homes fail?

Nursing homes fail because they are often understaffed, which can lead to residents not getting the care they need. They may also be underfunded, which can limit the quality of care that residents receive. Additionally, nursing homes can be unpleasant places to live, which can cause residents to feel unhappy or isolated. If a nursing home is not financially stable, it can lead to staff quitting and residents being forced to move. All of the above issues lead to nursing homes closing down.

Other Helpful Business Plan Articles & Templates

Business Plan Template For Small Businesses & Entrepreneurs

The Fox Group

Nursing Home Business Plan – 7 Key Points

Nursing home business plan drawing and coffe cup.

A nursing home business plan should contain seven key elements. Incorporating them into your document will help to ensure your success.

The U.S. is currently experiencing a shift in demographics. According to the U.S. Census Bureau , by the year 2034, older adults will outnumber children for the first time in U.S. history. By 2030, all Baby Boomers will be over the age of 65. As a result, this cohort will create more of a demand than ever for communities and facilities that care for the older adult population.

If you’re considering getting involved in the nursing home business, the first step you need to follow, after conducting a market feasibility study , as well as a financial feasibility analysis , is to create your nursing home business plan. A well-written and comprehensive business plan will not only help you focus on the vision for your business, but it will show investors and/or lenders that you’re committed to succeeding.

The skilled nursing business is a unique market, and success in this field requires a complete understanding of its many challenges. A business plan will help you convince financial institutions and investors that you’re well versed in the industry and have a clear picture of what you need to accomplish.

Challenges in Starting a Nursing Home Business

Operating skilled nursing facilities can be challenging in today’s market due to increased care costs for higher acuity patients, staffing shortages, reimbursement concerns, increased care alternatives, regulatory challenges, and liability issues.

This is why it’s crucial to guarantee your nursing home business plan is thorough and well-researched. Consequently, you’ll want to complete it before embarking on your new venture or attempting to procure funding. A properly formulated plan will not only convince lenders and investors that you have a viable business concept but it will also serve to hone your vision for your nursing home business.

Keep in mind that this is a brief overview of the many facets of information you’ll need to provide for your nursing home business plan. The nursing home business can be complicated, with a lot of information to cover.

The plan should contain s even main categories: (1) the executive summary, (2) a company summary, (3) the customer plan, (4) a market analysis, (5) a strategy for implementation, (6) the selection of a management team and (7) financial planning.

Items to Include in Your Nursing Home Business Plan

(1) executive summary.

The purpose of the executive summary is to give readers a brief description of your business. Thus, it must be well-written and concise. You want to draw your readers in and give them a brief synopsis of what your nursing home business plan is all about. So, keep it simple and make it engaging.

It may be the first part of your business plan, but it helps to write it last. Therefore, once you’ve covered all of the other details, it will be easier to write up the executive summary.

The executive summary should contain the following information:

(2) Company summary

In a company summary, you should state who you are, how you will operate your business, and what your goals are. The intent here is to provide your reader with a brief overview. Your company summary should include the following:

(3) Customer plan

Next, your customer plan should be a clear description of the service you’ll offer that emphasizes the benefits to your patients. One of the benefits of having a clear customer plan is it demonstrates that you have a firm and specific understanding of what your services are. You may include some of the following services:

(4) Market analysis

The market analysis is the section where you get to illustrate your knowledge of the industry and highlight your thorough research. Your intent should be to establish that you completely understand the market. This section should include the following:

(5) Strategy for implementation

In the next section, you need to summarize your sales strategy and describe your plans for implementation. “Failing to plan is planning to fail.” Thus, it is essential to articulate your implementation plan in detail.

(6) Management team

You’ll need to include a section detailing your business’s organizational team. An experienced and knowledgeable management is a key to operational success. Therefore, it is important to identify your team and their background. The following categories are relevant:

(7) Financial plan

Your financial plan is the final section of your business plan. You will not be able to complete this section until you’ve finished your market analysis and set your goals. If you engaged a third party to formulate a financial feasibility analysis, this is the section where you would place that analysis. You will need to include the following financial statements:

Do you need help creating your nursing home business plan?  If so, experts can help you dive into each of these categories to create a comprehensive plan.  Review some sample consulting engagements in nursing homes and assisted living to get started.

When you need proven expertise and performance

Craig fukushima, nha, mba.

Mr. Craig T. Fukushima’s health care experience spans more than 35 years with special expertise in the long term care sector, including implementation of innovative health care projects in domestic and international locations.

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COMMENTS

  1. Business Plan for a Nursing Home: Complete Guide">How to Write a Business Plan for a Nursing Home: Complete Guide

    Why do you need a business plan for your nursing home? The purpose of a business plan is to secure funding through one of the following channels: Obtain bank financing or secure a loan from other lenders (such as a SBA loan) Obtain private investments from investment funds, angel investors, etc. Obtain a public or a private grant

  2. Nursing Home Business Plan Example | Bplans">Nursing Home Business Plan Example | Bplans

    Our solution. Bright House aims to be that home for 14 lucky full-time assisted living residents, ...

  3. Nursing Home Business Plan Template & Guide [Updated 2024] - Growthink">Nursing Home Business Plan Template & Guide [Updated 2024] -...

    A business plan provides a snapshot of your nursing homes as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

  4. Nursing Home Business Plan PDF Example - SharpSheets">Nursing Home Business Plan PDF Example - SharpSheets

    The Plan. Our nursing home business plan is crafted to include all vital elements necessary for ...

  5. business plan for a nursing home?">How to write a business plan for a nursing home?

    What goes in the written part of a nursing home business plan? What tool can I use to write my nursing home business plan? what resources (human, equipment, and capital) are needed to get there, at what pace the business needs to progress to get there in time, and what risks you'll face along the way. The profit and loss (P&L) statement,

  6. Nursing Home Business Plans">Nursing Home Business Plans

    Nursing Home Business Plan Bright House aims to be a home for 14 lucky full-time assisted living residents, offering medically-skilled care in a respectful, self-sustaining community, and offering skilled nursing care for short-term residents. Home Health Care Business Plan

  7. Nursing Home - SharpSheets">How to Build a Financial Model for a Nursing Home - SharpSheets

    How to Write a Business Plan for a Nursing Home: Complete Guide 1. Forecast the Number of Residents The first thing you must do when preparing your financial projections for a nursing home is to forecast the number of residents you will accommodate and care for in the future. This can be done in a few steps:

  8. Nursing Home | Growthink">How to Start a Nursing Home | Growthink

    4. Secure Startup Funding for Your Nursing Home (If Needed) In developing your nursing home business plan, you might have determined that you need to raise funding to launch your business.. If so, the main sources of funding for a nursing home to consider are personal savings, family members and friends, credit card financing, bank loans, crowdfunding and angel investors.

  9. Nursing Home Business Plan - 7 Key Points - The Fox Group">Nursing Home Business Plan - 7 Key Points - The Fox Group

    If you’re considering getting involved in the nursing home business, the first step you need to follow, after conducting a market feasibility study, as well as a financial feasibility analysis, is to create your nursing home business plan.

  10. Nursing Home Business Plan Template + Example | Bplans">Nursing Home Business Plan Template + Example | Bplans

    1 million businesses. Download a free nursing home business plan template with SBA-approved format. Includes pre-filled examples and step-by-step guides for a successful start.