Month: December 2015

Can I make Money in a Group Home (Budget Basics)

When I am approached by individuals wanting to open their own group home, I usually get the following question.  To them the question seems simple. However it is a complex question with many variables to consider.  the question is usually framed something like this

“I really want to leave my corporate job and start a business doing something that I love.  I love working with others, I am a natural caregiver and I have so much love to give a (child, senior, adult with developmental disorders etc.).  I have been thinking about this for couple of years but before I start I want to know if I can actually earn a sustainable living for myself and my family in this industry.”

Does that sound familiar to you?

The truth is you and your next door neighbor can both open your own  group home. You can both serve the same population and have the same occupancy and same experience in the field,   the only difference is theirs could be extremely profitable while yours is on the verge of  bankruptcy.  Why is this so?  Several factors can determine the profitability of a group home.

  • They may have negotiated a better rate
  • They have a specialty, for which they charge a premium
  • Your mortgage or rent may be higher
  • Your staff salaries may be too high
  • Their expenses may be lower (utilities, insurances, vehicles, facility, employees)
  • You may have different business structures (LLC, sole proprietor, S corp, Non-profit)
  • You may have chose to do it alone while they chose to partner with professional consultants such as (Destination Group home Consultants – http://www.NDGHC.com)

The fact is that they are succeeding while you are failing.  So to answer the question I often explain whether or not you make or lose a lot of money in this industry will depend on ” Who is on YOUR Team.”  Having professional consultants will increase your chances of being profitable exponentially.  The problem with doing it alone is that you don’t know what you don’t know, and in this industry ignorance leads to mistakes and in business MISTAKES COST MONEY!

Our team at Destination Group Home Consulting Solutions can create a customized budget for your business, if you try to do it alone then follow these steps:

An operating budget gives you an outline of what day-to-day costs are associated with running your group home. Without a well-conceived operating plan, your group home may founder, especially since many costs that could have been predicted in a structured budget may overwhelm the capability of your enterprise and what it can afford. Poorly planned operating budgets may even cause your group home to go bankrupt.

Planning

While it is not possible for you to anticipate every single expense that lies ahead for your group home, it is possible to study your competition and anticipate your business expenses based on how you will run your home. If you have past experience working in group homes, use the knowledge you gained from your former job in your operating budget. For example, you may have an idea of what a fair salary is based on what you knew your former group home employer paid. If you have no past experience in group homes, consider hiring a consultant to break down realistic numbers for your operating budget, or contact acquaintances who may work in the industry and can provide you with practical information.

Performance Analysis

Setting up an operating budget is imperative for performance analysis. The budget allows you to assess what is and isn’t working within your group home and to tweak the inconsistencies accordingly. For example, you may find after your group home has been open for a while that you over-budgeted for janitorial supplies. If this is the case, you can adjust your forward-looking budget to eliminate a certain percentage of money in this category and reallocate it in a new category that you may have under-budgeted for.

Components

Your operating budget should consist of a few key components. Depending on what type of group home you are running, these components may include salaries, legal expenses, and mortgage or rent you are paying for the property you occupy unless you already own it outright. Like any business, yours may encounter unforeseen factors that you did not originally plan for within your operating budget. These may include any accidents, lawsuits or damage from natural disasters such as floods or earthquakes. When setting up an operating budget for your group home, always budget extra in a miscellaneous category for unexpected circumstances.

Structure

According to business consultants Thomsen Business Information, the structure of most operating budgets will generally follow this format: Sales minus variable costs equals gross profit. Gross profit minus fixed costs, depreciation and interests equals your net profit. When calculating your operating budget set up these two equations using your estimated numbers to predict when and how much you will profit from your group home.

 

For more information feel free to visit our website at http://www.NDGHC.com

 

How to Open an Adult Group Home (Senior Living Facility)

Senior citizens are expected to make up 20 percent of the entire American population by 2030, Forbes Magazine reports. The high numbers of aging individuals in the country mean that many business opportunities are available for people who serve this demographic. A group home, also called a senior living home, is a business that allows senior citizens to live together under the supervision of caregivers.

 

Step 1Create a legal business entity for the group home. Select a sole proprietorship, partnership, limited liability company, or corporation legal structure for the new business. Sole proprietorship and partnerships are simple to set up but do not offer strong legal protections. According to Forbes Magazine, the best structure for an assisted living facility or group home is the limited liability company. Contact the local Secretary of State’s office to obtain the necessary legal forms.

 

Step 2Write a detailed business plan for the group home business. Provide details on the projected expenses and revenue sources for the company. According to Forbes Magazine, independent living communities should plan on an average yearly income of $26,333 for each resident and a profit margin of around 30 percent. Include annual occupancy targets in the business plan. Group homes that have been in business for two years often require occupancy rates to be higher than 90 percent in order to be profitable, according the the President of the National Investment Center for the Seniors Housing and Care Industry. Consult with an attorney and an accountant to ensure that no legal or financial requirements have been overlooked in the business plan.

Obtain a federal tax identification number, which is also known as an Employer Identification Number (EIN). Apply for this number at the Internal Revenue Service website, or a nearby IRS office location. The EIN allows a group home to hire employees and pay company taxes as a business entity.

 

Step 4Apply for a permit to operate a group home facility. Each state has different requirements for the permit application process. Provide documentation that shows a community need for a new group home location, if required by the state. Follow local zoning regulations carefully during the construction or renovation of a new group home. Determine which permits are required by contacting the state Department of Human Services or similar agency.

 

Step 5Locate a source of financing for the group home business. Group homes for seniors often require large amounts of start up money. The costs for group homes average around $130,000 or more for each room in the facility, according to “Assisted Living Strategies for Changing Markets” author Jim Moore. Contact family members, friends, and commercial banks to determine which financing options are available. Use the business plan to show potential investors the revenue, expense, and growth details of the group home.

 

Step 6Select a suitable location for the home. Contact architects, interior designers, and builders who have experience in large group home projects. Consider using national assisted living home construction firms such as Turner Construction or Weitz Construction. Consult with a kitchen designer to ensure that the food service facilities are adequate for the estimated number of group home residents. Ensure that all Americans with Disabilities Act (ADA) guidelines are followed during the planning and construction of the home, in order to accommodate residents with physical challenges.

 

Step 7Choose vendors for the many goods and supplies that are needed in a group home. Purchase industrial-strength laundry equipment and kitchen appliances to serve the ongoing needs of residents. Locate large food distributors that are able to meet the high demand of three meals per day for each group home member. Consider partnering with a local pharmacy to offer prescription drug refills for residents.

 

Step 8Determine which staff positions are required and hire the necessary employees. Make sure that enough caregivers, housekeepers, food specialists, and admissions coordinators are on staff to meet the projected needs of residents. Be prepared for the high staff turnover in this industry, which is often around 85 percent according to the director of Benchmark Senior Assisted Living. Implement benefit and retention programs to keep skilled staff members from leaving.

 

Step 9Plan value-added services and amenities for both group home residents and visitors. Arrange events, outings, and transportation for members. Consider offering programs for children and families, as well as social activities for residents. Find ways to set the group home apart from other competing facilities as a way to increase the competitive advantage and keep occupancy rates high.

 

Step 10Begin advertising the group home to individuals who require this service. Provide tours of the new facility and begin placing residents into the home. Continue to follow all state and local regulations and zoning rules to ensure that the group home remains safe and successful.

Destination Group Home Consulting Solutions is here to help you with every step of the group home start-up process.  We also provide professional consulting and management services designed to help your business become successful f.  For more information visit our website at http://www.NDGHC.com or call us at 1.888.451.3330.

Grants to Build Group Homes for Foster Kids

Grants to Build Group Homes for Foster Kids

by Stacy Zeiger, Demand Media Google

In addition to compassion and a heavy dose of patience, working with foster kids requires a lot of money, especially if you desire to build a group home. Group homes allow multiple foster kids to live together and may cater to a special group of foster kids, such as runaways or teens approaching age 18. Grants help fund the building of foster homes or provide other financial assistance to aid in the process.

The Dr. Phil Foundation

One of the goals of the Dr. Phil Foundation is to help foster children. The foundation has awarded multiple grants to organizations related to foster care and building homes for other disadvantaged children. While The Dr. Phil Foundation does not offer specific grants that your organization may apply for, if you have developed a grant proposal and need funding, it may prove worthwhile to contact the Dr. Phil Foundation and state a case for becoming one of the organization’s causes. Grants previously award by the agency range from $10,000 to over $100,000.

Homeless Youth Grants

Some grants seek to provide funding to organizations that aid homeless and runaway youth, including those in foster care. The U.S. Department of Health and Human Services Administration for Children & Families sponsors the Runaway and Homeless Youth Basic Center Program, which provides funding for group homes and shelters that target homeless and runaway youth. Grants are awarded in three-year increments and provide funding between $100,000 and $200,000 a year.

Transition Programs

Some grants target programs that help foster care kids transition from living in foster care to being on their own as adults. The Andrus Family Fund sponsors Foster Care to Independence grants, which support programs that incorporate a transition framework. Previously awarded grants range from $15,000 to over $200,000. Before seeking a grant from the Andrus Family Fund, review the previously awarded grants and information on how the grantees have implemented a transition framework into their programs to ensure your grant proposal meets the organization’s guidelines. After reviewing the guidelines and examples, applicants must fill out an online application and include a description of the project.

State Foster Care Organizations

If you have difficulty obtaining grants to build a group home for foster kids, turn to a local foster care organization or other state organization that supports foster care for help. These organizations typically have contacts with a wealth of individuals and companies that have made foster care their cause and may be able to help you solicit funding or provide you with more information about whom to contact. Your county’s foster care office or state office of social services may also be able to direct you to donors and other resources.