With an increase in demand for adult daycare centers, starting a daycare center for seniors may seem like a great business idea. However, like any business, creating an adult daycare also requires an in-depth analysis of market dynamics, understanding local demography, and a solid business plan.
By committing to provide the best possible quality care for seniors in the community, an adult daycare gives family caregivers the much-desired time and freedom to live their lives and attend work.
In this article, let’s go through the process and 12 critical steps of starting a senior daycare center in detail.
With significant progress in medical science and better senior care, developed countries observe a rapid increase in seniors’ number. It is also creating a great demand for adult care services across our cities and towns in North America.
While recent Covid Pandemic has made Long term Senior care homes household names because of the number of deaths occurred in these facilities. However, in addition to Long term senior homes, many seniors and their family members also rely on adult daycare centers to manage senior care issues.
Moreover, a full-time care facility may exceed the budget for many families. A few other families may not want to admit their parents and grandparents in a long-term care home.
However, those family caregivers still need to go to the office, attend schools, and do householder chores. It is where daycare facilities help. It also gives family members an option to take an occasional breather without a long-term commitment.
Adult daycare shares a similarity with child daycare, and that is in the operation hours. It is suitable for older adults who can take care of themselves at home but sometimes need a place to spend their daytime meeting other people.
Most of the seniors availing of adult daycare services are over 65 years of age. They may come from varying ethnicity and have different physical abilities. Many of them may suffer from one or more psychotic disorders, such as dementia or one or more physical disabilities.
These seniors need assistance in taking care of their daily needs and also following their medical routine.
Senior daycare homes help these seniors stay active and healthy. Senior daycare centers provide clients with meals and conduct activities and fitness classes. These centers also arrange field trips and may also provide transportation to and from home.
Although the seniors pay for this service most of the time, few daycares may also avail of government subsidies.
Moreover, many of the daycare centers for seniors have long waiting lists because there is strong demand for these facilities. So, if you decide to pursue this excellent entrepreneurial opportunity, continue to read as we go through the process step by step in little detail.
Let’s go through all these aspects and steps of starting a Senior daycare center in detail.
Critical steps to follow
Although starting a senior daycare center will have its own challenges, you may start one with an initial investment of ~$100,000. This seed fund will cover:
- Daycare registration fee and legal fees
- First-year facility lease,
- Designing and Modeling the facility for seniors’ daycare services
- Supplies, furniture, and equipment
- Staff compensation
- General liability, property, and casualty insurance
- Marketing and promotion
Depending on your local laws, you may be able to start adult daycare at home. However, it may constrain the number of clients you can serve at a time. If you want to pursue that option, please ensure you validate your local laws and regulations.
In attracting new clientele, networking plays a critical factor in building an excellent foundation for your business.
When trying to understand the business nuances, you may also contact community nursing homes and assisted care centers. These conversations will help you uncover your community’s needs and how you can help bridge the gap by providing those specific services.
1. Market research to understand the high-level process
A daycare center, whether it is for children or adults, is built on trust. Therefore, before any senior or her family member repose their confidence in your business, you would have to understand the nuances of this business.
One way to get this knowledge and experience is by working at an existing daycare center for seniors in your community.
While an online course or classroom training will help you understand medical conditions and regulation compliance, you will not understand the practical challenges until you make your hands dirty.
When working at an adult daycare center, you get opportunities like walking an older adult and building stronger bonds with seniors. You may not understand what it is like to run an adult daycare center until you have personal experiences.
Moreover, considering there is always a lack of workers in this space, you can even start as a volunteer or part-time helper with limited commitment.
When working there, you will get a sense of the positives and negatives of running a daycare facility for seniors. Similarly, talking to caregiving staff helps you understand their view about working in the care center.
As you do this market research, you will learn ways to start and improve your future service. Getting real and practical feedback from potential clients and prospective employees is the foundation of your business’s operational excellence.
2. Planning is critical
You may have already heard the saying that failing to plan is the perfect recipe for planning to fail. Like any other business, adult daycare businesses also fail because of the lack of a plan. Running an adult daycare business involves executing a complex operation.
This stream of business requires a substantial investment, not only financial but also emotional and time.
You have to deliberate facility location, in-depth market analysis, capital expenditure, operational cost, potential customer, recruitment of staff, and marketing & promotions, among many other things, as part of your business plan.
This way, a business plan helps you create a roadmap to follow.
3. Analyze the Market
You may start your market analysis with public databases. One of these publicly available resources is the latest census data of your country. It can help you estimate the number of seniors who live in the geographical area of your interest.
As the first step in creating your business plan, the market analysis helps you confirm or reject your hypothesis that the community needs a new daycare business.
If the census number shows that many seniors live in the city where you are considering starting your business, you have cleared the first step. The next step is to create a list of the senior daycare centers in your locality and their occupancy level.
The most favorable situation for you is that there are enough daycare centers for seniors, but they all have high occupancy. However, if either the number of senior daycare centers or their occupancy rate is low, it will require further analysis.
Your next step could be to understand the services, existing daycare centers, or similar businesses offer. Here, you don’t look at daycare centers only and but also look at similar businesses like nursing homes and community service groups.
It would help if you also considered that your competition might also come from individuals who may also be delivering similar services from their homes. In addition to that, there could be few agencies that would home-deliver the daycare services to seniors.
Once you get the favorable outcome from your market analysis of market demand, customer base, and competitor landscape, you can move to the next step – exploring options for setting up the business.
4. Finalize the location
Your market analysis should give you enough conviction on the location where you set up your business. Your decision of location will directly impact your clients. Therefore, as close your facility is to potential clients’ homes, as better chances are that they will give you a business.
Moreover, you would appreciate that the buyer of your services often is the child of a senior, who is different from the user, an older adult himself. Having an accessible location reduces potential objection from buyers that they don’t have time to bring their parents every day.
In addition to the things mentioned above, other things that you may consider while finalizing a location are government regulations, natural lighting, traffic conditions, ease of transportation, and the cost of renting or buying.
Managing an adult daycare service is not easy; however, a right location may make things a little easier for you.
5. Explore options of business setup
Before you decide to set up a greenfield entity that is everything from scratch, you must explore two more options:
- Look for an opportunity to take a franchise of an established brand of daycare for seniors in your region. It may offer not only initial funding support but also reduces your burden of marketing and promotions. It is exceptionally convenient when you are in the startup phase. However, you must look at the terms and conditions these franchisees come with.
- The second option you should explore is to acquire an existing senior daycare center. You may find a business for sale either because the owner of that business does not have adequate time to manage that business OR it is a loss-making business because of mismanagement. If you could acquire an existing daycare center, you may get access to its staff as well as clients. On top of that, you wouldn’t need to worry about the licensing requirements and regulatory compliance needs.
6. Identify your essential services
Different adult daycare facilities may specialize in dealing with the diverse needs of older adults. For example, one facility may cater to the unique needs of Alzheimer’s patients. Another may specialize in taking care of wheelchair-bound older adults.
The kind of clients you cater to will play a critical role in how you design your facility. If you have Alzheimer’s patients as your clients, you may create provisions like door locks, so those patients don’t go walking unattended.
To focus on wheelchair-bound older adults, you may have to lower the height of reception counters, storage shelves, and dining or study tables in your facility. It is to make the facility more accessible and comfortable for your clients.
The kind of services you offer also helps you differentiate. For example, modifying a vehicle to allow wheelchair access may incur additional expenses, but it will secure customer loyalty and potential referrals.
Like in any business, figuring out the core services you can deliver best and focusing on that will be the best use of your time and energy.
7. Acquire Licenses and buy insurance cover
Before you can set up the business entity, you will need to research the local government’s compliance process and its zoning and business-registration requirements. While a few jurisdictions may have a more straightforward licensing process for adult daycare centers, others may require that owner and administrator write certification exams.
In addition to that, serving adult patients with unique needs such as dementia will require additional licensing. If you plan to offer transportation to your clients, you will also need to acquire a commercial vehicle license.
Moreover, in the US, if you want to allow your clients to pay through Medicaid, you will have to comply with the requirements of the state’s Medicaid agency. In summary, jurisdictions may vary licensing and certification requirements, so do your due diligence for your business’s smooth start.
Besides licenses and certifications, buying insurance cover at the start may help your transfer many of your unmitigated risks. So, ensure you get the right coverage to cover all the manage risks.
8. Financials – Investment & Return
Your financial planning helps your answer three questions –
- What should be your initial investment?
- What would be operational expenses to manage the day to day activities? We call it Cost budget.
- What kind of revenue cash inflow can you expect from the business?
Estimate Initial Investment
First, you would like to estimate the initial investment you will have to make to open an adult daycare business. Depending on the set of services you would like to offer influences this number.
If you have an opportunity to remodel an existing stand-alone facility or your own home, it may cost less than if you were building a new facility altogether. If you plan to host many clients, your initial cost will also be very high vis-à-vis if you plan to start with a small clientele in your home setting.
The kind of things your initial investment may cover include acquiring initial licenses and registration, building or renovating ramps for accessibility, senior-friendly washrooms and showers, adjustable beds, kitchen, and dining facilities, and required security measures.
Create Cost budget
Depending on your clients’ needs and your operation’s size, a startup could quickly run-up to a few hundred thousand dollars. Therefore, creating a cost budget and sticking with it is very crucial for your business’s success.
This set of expenses will be ongoing through your operations. After you have created your facility, you will start incurring regular expenses. These will include utilities such as electricity, heat/air-conditioning, purchasing stationery, food and grocery, and medical equipment.
The facility will also need to pass regular inspections – facility and health, which will have its own cost besides paying for staff salaries, visiting doctors, and healthcare professionals.
For example, concerning salaries, there could be a considerable variation. Depending on experience and expertise, an assistant may cost $10-20 / hour or $25,000 to $50,000 / year. Similarly, a facility manager may cost up to $60,000 a year, and a healthcare administrator can cost up to $70,000 a year.
For any new person in your staff, you may also have to incur the cost of their first aid training, cardiopulmonary resuscitation (CPR), lifting and transporting seniors, and overall hygiene. Besides that, you will also have to arrange for refrigeration and storage for medications.
The insurance premium you’ll pay to transfer your operational risk will also be a part of the operating expenses.
To keep your operational costs down, you must monitor all your utilities. You may have to ensure that you keep essential staff only, avoid redundant supplies, improve estimate on food to prevent wastage, and procure reusable and washable towels to reduce paper towels’ consumption.
Your ability to strictly follow the budget increases the chance of your business success.
Forecast Earnings and Cash-inflow
Your primary source of income for which you started the business would be your elderly clients. Although it may vary between locations, an adult daycare facility charges up to $1500 per month for few hours of daily service. If you have clients who avail of your services occasionally, they may be able to pay around $100 a day. It will vary as per the kind of services they need.
As the baby boomer population is growing across the globe, you may also forecast to get more clients once your facility becomes popular in your community. As the need for adult daycare services grows, your earning potential may also go up.
In addition to the fee your clients pay, there are many grants available for the adult daycare centers.
It would help if you kept exploring grants, loans, and other financial assistance programs available for an adult daycare center. These assistance packages may come from your municipal, state/province, or federal governments.
For example, through its commodity supplemental food program, the US Department of Agriculture supports institutions that provide nutritious meals to the elderly. These institutions also include adult daycare centers.
So, in a nutshell, you should account for all potential cash outflow gates and explore all possible avenues of cash inflow. A strict tab on these things will keep your daycare business financially healthy.
9. Design the ambiance and structure of the facility
Adult daycare businesses that consider seniors’ specific needs into account when designing their facilities can differentiate themselves from their competitors. Deciding on a style is essential in the adult daycare business because, if done right, it will make customers feel welcome, but if not done right, it will scare them away.
While there is no limit to finding a perfect design for your facility, there are few obvious things. For example, having big and clear font for any text or writing in the facility and bright colors on the walls to induce vibrancy generally appeal to seniors.
One unique way of creating the right design for your facility is approaching a nearby academic institution and set up a design contest among students. Such competition and an attraction for awards will attract the local students, and you get to choose the best out of that.
10. Hiring and training staff
You already know that you can’t do everything on your own in this business. So, it’s essential to plan for hiring the right people.
By now, you have decided on the services you want to offer. You may also have estimated the number of clients you are targeting and created your cash inflow and cash outflow. With those inputs, you can estimate the number and kind of employees you need.
Various roles at your daycare center will require different skills. It would help if you clearly understood what you expect from them and their minimum classification.
To find the people you want to hire, you can reach out to local staffing agencies. You may also reach out to hospitals and volunteer centers. There you will find people with skills close to what you need.
Once again, reaching out to medical programs and social service programs at nearby colleges and universities may give excellent results. It is a great way to find the required help and without spending a fortune.
11. Procure equipment and tools
Your daycare facility will need to set up a commercial kitchen and a laundry facility to cater to your clients’ needs. You also need to ensure a supply of essential items such as beds, sheets and blankets, and tables and chairs.
Besides that, depending on the services you offer at your daycare center, you will need the right set of tools and equipment. Some of this equipment includes medical & therapeutic devices, lift-assist equipment, lift-chairs, and safety gear.
You will need to provision for waste disposal, especially for the bio-hazardous waste, because the facility will be using medical supplies to take care of the clients. Having entertainment options is also critical for adult daycare centers because many seniors would be paying for it.
These are the essential things that you will need from day one of starting a new daycare center for seniors. You should ensure that the facility keeps enough inventory as procuring any of this in an emergency will put a dent in your cost budget.
12. Marketing matters
Last thing but never least, what decides your business’s commercial success is marketing and promotion. It is critical to attract new clients to your daycare center and ensure your brand is managed well throughout its lifetime.
With growing technology intervention in our lives, you may use digital marketing tools to spread the word about your business.
Starting by creating a website, take advantage of Facebook Ad features and Google AdWords to get the initial eyeballs from your target clients, buyers, and users. For example, you may buy a non-intrusive ad space directed at men and women of 45 to 65 years of age within 5 km of your facility zip code.
However, the most critical marketing tool for any business goes through local networks and word of mouth. To grow your network among your target clients, you may also try to engage with community groups created for veterans and local YMCAs and YWCAs.
Founding an adult daycare business is not easy. It requires a multidimensional approach to take care of many things in parallel. Keeping seniors’ vulnerability in mind, senior daycare centers have to comply with many regulations and strict guidelines.
However, for the individuals passionate about serving seniors and want to do some good for them but still being paid for the service, starting a daycare center for the elderly can be a great option. The 12-point disciplined approach described in this article will go a long way in making your business successful.