Unlocking Profit: How to Scale Your Assisted Living Business?
Jul 22, 2024
Let's look at an important question for new entrepreneurs: Is assisted living a scalable business? As the demand for senior care grows due to an aging population, the assisted living business presents an appealing opportunity. Understanding scalability is critical for long-term success, whether entering this dynamic profession or managing a facility.
Scaling an assisted living business entails more than simply increasing beds or expanding facilities. It necessitates strategic planning, streamlined operations, and a thorough awareness of regulatory requirements and market dynamics. Throughout this blog, we will look at the key aspects that contribute to assisted living ventures' scalability. From initial setup and operational concerns to funding possibilities and growth strategies, we hope to provide you with the information you need to navigate and succeed in this developing market.
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What Does It Mean to Have a Scalable Business?
A scalable business can considerably raise its revenues while maintaining its operational costs. This frequently entails utilizing economies of scale, in which efficiencies are obtained as the organization grows. Scalability in assisted living can be achieved by leveraging shared resources such as workforce and vendor contracts.
Achieving Economies of Scale in Assisted Living
Staffing
Staffing is one of the most important areas for achieving economies of scale. For example, an administrator may be responsible for many facilities, in Idaho, an administrator can oversee two bigger facilities (20+ beds) or three smaller residential facilities (10-16 beds). By sharing administrative resources, you can lower overall costs per site. However, as your business expands to 10 or more homes, you may need to engage many administrators or an executive-level manager to oversee them, resulting in further potential for scale.
Vendor Contracts
Contracts with vendors may also bring economies of scale. Negotiating bulk purchasing arrangements with food vendors or pharmacies can help you save money on each unit. For example, purchasing bulk from Costco or Sam's Club and negotiating with commercial food vendors can drastically reduce costs. This is especially useful when you have many facilities nearby.
In-State vs. Out-of-State Scalability
In-State Scalability
Scaling within a single state has various advantages. First, administrative control is more straightforward. Administrators can oversee several facilities while assuring consistency in quality and compliance. Furthermore, personnel flexibility is more realistic. While the nature of caregiving employment may prevent them from working across various sites, effective recruiting can help overcome this issue. Employees living in a central location can be rotated between adjacent facilities. Bulk purchasing of food and supplies and centralized payroll solutions such as Gusto can help streamline operations and cut costs.
Out-of-State Scalability
Scaling across states offers additional issues. Vendor contracts, for example, may provide multi-state services, although pricing differences are often low, and distinct account managers may handle each state, diminishing potential savings. Additionally, personnel and licensing issues may develop due to varied state legislation and procedures, which hinder administrative and staffing consistency. The logistical constraints of managing employees across state lines might be prohibitive.
Assisted Living is a highly scalable business. Understanding and using economies of scale, particularly in staffing and vendor contracts, will help you establish a strong and effective business. However, in-state scaling frequently offers more chances and fewer challenges than out-of-state expansion.
If you found this information helpful, check out our Business Plan Checklist on Assisted Living Investing. This comprehensive guide will help you build a solid business plan, ensuring a profitable and scalable opportunity.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
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Transcript
00:00:00
Hi friend I am Brandon Gustafson I help new and aspiring Real Estate Investors launch their Assisted Living business in today's video we're going to be talking about is assisted living a scalable business welcome to Assisted Living [Music] investing hey friend welcome back to the channel before we get into our topic for today's video is assisted living a scalable business I want to remind you to get over to the website have a I a free tool for you over there my underwriting calculator is going to help
00:00:33
you kind of move things along on your investment journey and help you understand if you have a profitable opportunity in front of you or not so make sure you go over to Assisted Living investing. net you get access to that free underwriting calculator now let's get into the topic for today's video we're talking about is assisted living a scalable business can you scale this business and actually create an empire of assisted living facilities now before I really get into that I want to explain
00:01:00
to you what it means to have a scalable business and what I mean by that is you're able to have what I would call economies of scale which means you can kind of share a few things so that could be Staffing I mean you could you could have an administrator that is over multiple facilities or it could be contracts that you have with vendors and getting better pricing with your Pharmacy or with a food vendor or something like that those are what I would call economies of scale and as what allows you to have a scalable
00:01:32
Assisted Living business so yes I won't bury the lead um it is a scalable business you can actually scale this quite easily and I wanted to get a little bit into this but I want to explain to you the differences and I have some experience with this because I own and operate two assisted living facilities they are out of state I live in Utah one of my facilities is in Colorado the other one is in Idaho and through that process I've learned what it's like to scale in state and I've
00:01:59
learned what like to scale out of state and i' like to share a little bit about how to do that and what I'm doing going forward because I think it will give you a little bit of guidance on where you're at in your journey so scaling in state is that possible kind what what are the pros and cons of doing that let's talk about that for a little bit so let's first talk about an administrator so your administrator is the person that is kind of overseeing everything that's happening inside of your facility
00:02:26
they're the person that is running the day-to-day of the home that could be you you might be an owner operator SL administrator and your hands are super full and you've got a lot going on um or it could be somebody else that you've hired regardless that administrator depending on the state where you're at can generally oversee multiple facilities so I'm going to use an example in Idaho because it's the one I'm most familiar with in Idaho there's a rule and it's based off of how many
00:02:51
beds are in a facility so if you have a larger facility 20 plus beds your administrator my understanding is you could be over two of those facilities if you have smaller residential style facilities 16 you know 10 to 16 beds somewhere in that range maybe a little bit less you could have that administrator be over three homes um they can work around uh those different schedules and and working with those different people and those different homes often when you do that you're going to have some kind of an assistant
00:03:21
administrator that actually does a lot of the day-to-day stuff in there and the license of that administrator is going to sit over the top of those facilities and make sure that everything is in compliance and all the paperwork is done and and things are going on the assistant administrator is the one that's setting the the schedules for the staff and covering for staff when they're not there and making sure that things are implemented and actually carried out so that's how you can get
00:03:46
that scill with an administrator now where you might run into an issue is if you have 10 homes you're not going to be able to have only one administrator you're going to have to have multiple and at that level maybe you want to have some kind of an executive level um type of a person that is overseeing multiple administrators and helping you build this but you can build that scale inside of your business which is really exciting now let's talk a little bit about Staffing when you're in state yeah
00:04:11
you could have uh you could have two facilities three facilities in a f mile radius and or a 10 milei radius or something like that they're relatively close definitely drivable for your staff but you might not be able to get that economy of scale with the staff because this type of an industry there's so much fluidity into it and there's a lot of people that are quitting and the transitory nature of these positions you might not be able to get somebody just your staff your caregiving staff to
00:04:41
cover shifts at multiple different facilities you might be overworking them at some point so there's not a ton of of ability to scale there where you could potentially do that is if you've got somebody that lives kind of in the in the middle and you've got somebody that lives over here you might be able to take that person who was working at this facility that's close by to this person who's a new H um they could start coming in there and that person that's in the middle could go up to a different
00:05:04
facility so there is some ability to do that but you're probably not going to have staff working at multiple facilities at a given time it's just going to be kind of complex and and a little bit difficult there uh it also could run into some issues with your payroll as well as you do that if you want some help with payroll by the way I'm going to put a link down below for gusta that's who we use for payroll it'll give you a I think it's a $100 Visa gift card if you go ahead and work
00:05:32
with them and I love working with gusto they're great to work with and you know give you a little bit of a a kickback there um if you are in the in a spot where you are needing that payroll so make sure you check gesto out again we'll put that link down below so in state there is actually um some good opportunities to create some scalability there there's especially with the Staffing you're able to kind of build that in a little bit uh you can probably do this also with food if you just go
00:06:01
and buy all of your food from a Sams or a Costco or something like that and you buy in big bulk things or you could even get with a commercial food vendor that might give you some better pricing because if you have the volume with enough facilities you could actually create something good um from that standpoint to create some scalability in state and a in a kind of a very specific region um I think you're going to be able to find some good economies of scale has the potential to save you quite a bit of money actually which is
00:06:27
really good from an administrator standpoint for example example if you're paying somebody $60,000 to be over one facility and now you've got two and you bump their pay up to $80,000 990,000 you're still averaging 4 $445,000 Which is less than the 60,000 so it's something that you should kind of be aware of because you could save yourself a significant amount of money if you're able to implement some of this scaling inside of your business now let's talk a little bit about outof State scalability
00:06:58
and this is where um for me I can give you a little bit of an example but I can also tell you not a lot of opportunities to have scalability when you are working out of state where you can do this is working with vendors so for example we use the same Pharmacy vendor at both of our facilities they're out of state they give us a little bit of a of a price break there but it's such a small amount that it doesn't uh create much of a difference for us you might be able to find a commercial food vendor that could
00:07:26
do it but again they're out of state and they're probably working with different account account managers as you go into that there's no ability to build that scale with your staff because they're out of state and they have different licenses and your administrator um and your staff can't fly to multiple States if you're up in the the East Coast where you've got some proximity with States um up in the Northeast then potentially you could do that I'm not familiar enough
00:07:53
with it um but again there could be different rules and regulations for different states and potentially different licenses and it might be more of a head than it's worth to try to figure that out and so you want to just kind of be aware that the scalability when you're working in different states when you have facilities in different states there's not as much ability to scale and that leads me to my next topic um we are actually making a change with our facilities uh and I've talked to a
00:08:18
few people about this uh in in calls we're actually going to be selling our our home in Colorado and we're going to shift our Focus up in Idaho we like the the market there a little bit better it's a little bit closer to us and we feel like there's more of an ability to scale up in that area so at this point when you're watching this we may have sold it but if you're interested in looking at that facility interested in buying it then reach out to me you can get on the website
00:08:44
Assisted Living investing. net and we can have a conversation there I think if you go to contact Assisted Living investing. netcon um you can get access ask me a question we can touch base on that so just wanted to kind of give you all a little bit of transparency into my world and where we're at and and what we're trying to do because we see this uh this opportunity to scale and it's something that we really want to do and really want to implement so it's something that we're going to be working
00:09:09
towards which we're really really excited about so to recap what we've been talking about today we talking about what does it mean to have a scalable business we talked about scaling inside of state and how that's possible and scaling outside of State um and why that might be a little bit difficult for you to do if you found this information to be helpful make sure you like the video subscribe and ring the bell as well so you get notified every time we put out this content we we put out content twice a week and I love
00:09:35
being out there and helping you on your journey make sure you get over to the website also Assisted Living investing. net we'll have links down below but you can get the business planning guide which is going to help you uh build a business plan and underwrite your your facility and make sure you have a profitable uh opportunity in front of you so you feel confident in your ability to move forward and the accelerator course as well which is a step-by-step guide that is a 12 week path to owning your Assisted Living
00:10:02
business and help you get to the point where you can you can do this on your own I love coaching people I love helping people out if you feel like you need a little bit of extra uh assistance in addition to that accelerator course make sure you get over to Assisted Living investing. net strategy we can set up a call and I can explain to you what that course looks like with the coaching uh attached to it and how it could help you out in in building out your goals and your dreams to help you launch your Assisted Living business
00:10:32
does residential Assisted Living sound interesting to you but you don't know how to get started at Assisted Living investing we're here to help you through the process start to finish to launch your Assisted Living business I want to thank you for watching and remind you that it doesn't take a lot just a little bit just keep going keep making progress step by step by step I promise you that if you do that and you stay consistent and keep making progress you're going to be successful want to thank you for
00:10:54
watching and have a great day [Music]
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