The Practical Use Of Strategic Planning
Select one Strategic Plan from the two listed below and find another plan online or through the Walden University Library”s Gale Virtual Reference Library. Feel free to use the optional links to other Strategic Plans listed below or find your own. Be sure you include the link to the second Strategic Plan in your Assignment. If you work in a health care setting, you can ask for a copy of the Strategic Plan from your organization.
Strategic Plans
Minnesota Department of Veterans Affairs MN Veterans Homes Strategic Plan 2008″2013
Home Again Assisted Living
Links to Other Strategic Plans (optional)
Seattle Children’s Hospital: Laying the Foundation for the Next 100 Years
http://www.seattlechildrens.org/about/strategic-plan/
Trillium Health Centre’s Strategic Plan 2009/10-2011/12
http://trilliumhealthpartners.ca/strategy/public/Pages/Strategic-Plan-2013-2018.aspx
Nevada Strategic Health Care Plan
http://www.lyon-county.org/DocumentCenter/View/6294
The Michigan Prisoner Health Care Improvement Project
http://www.michigan.gov/documents/corrections/Health_Care_Strategic_Plan_222384_7.pdf
UC Davis Health System Strategic Plan
http://www.ucdmc.ucdavis.edu/aboutus/pdf/strategic_plan_web.pdf
By Day 7
Write a 2- to 3-page paper to compare and evaluate the two Strategic Plans you select. Address the following:
How are the strategies different?
What are the key elements of each Strategic Plan?
Compare the goals and strategies identified in each one. Which plan is likely to be more successful and why?
Put yourself in the role of a manager at one or both facilities. What are your responsibilities in ensuring one or both are successful?
What barriers are there to successful implementation of the strategies, and how could the manager overcome these barriers?
Strategic Plans attachments below
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Minnesota Department of Veterans Affairs
MN Veterans Homes Strategic Plan 2008 – 2013
December 2009 Update
Page 2 of 7
Minnesota Veterans Home – Minneapolis
The Minnesota Veterans Home – Minneapolis was once known as the Old Soldiers Home. It was built in the late 1800’s for indigent Veterans of the Civil War. Founders of the Home intended for it to be peaceful, beautiful and comfortable community for the Minnesota Veterans who required care during their golden years. The Home sits high on bluffs overlooking the Mississippi River and near the picturesque Minnehaha Falls. In 1887, the Legislature authorized the establishment of a Soldiers Home as a reward to the brave and deserving.
The Minneapolis campus consists of 341 skilled nursing home beds and 161 licensed domiciliary beds; providing nursing care and related health and social
services to Veterans and their spouses who meet eligibility and admission requirements.
Location Highlights:
The Minneapolis Campus is close to various public transportation systems, libraries, colleges, shopping malls, city parks and various businesses that may offer work opportunities for domiciliary Residents. The Home has a close working relationship with the VA Medical Center in Minneapolis.
Minnesota Veterans Home – Hastings
In 1978, the Hastings State Hospital was converted into a domiciliary residence for Minnesota Veterans. At the time, it was licensed for 200 board and care beds.
Located 21 miles southeast of St. Paul on 128 beautiful wooded acres along the Vermillion River, The Minnesota Veterans Home – Hastings houses Residents in two separate buildings, each providing access to the campus and many amenities.
Resident Profile
The Veteran who would most benefit from living at The Minnesota Veterans Home – Hastings is someone in need of medication management, psychosocial support and personal care reminders, but not requiring skilled nursing-level care.
The current clientele of The Minnesota Veterans Home – Hastings have a variety of medical, mental and/or chemical health needs. The top admitting diagnoses are:
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• Alcohol/chemical/polysubstance dependency • Schizophrenia • Major depression disorder/depression • Diabetes
Fifty percent of admitting Veterans are homeless or at risk of being homeless and the Residents are prescribed an average of 11 medications each. The staff works with the Residents of the Minnesota Veterans Home – Hastings to address their significant and diverse needs while empowering the Veterans to make positive choices to achieve change in their own lives.
Minnesota Veterans Home – Silver Bay
In 1991, the Silver Bay Elementary School was converted into a skilled care facility for Minnesota Veterans. The Minnesota Veterans Home – Silver Bay is located on the scenic North Shore of Minnesota overlooking Lake Superior.
Our Home is licensed for 87 skilled care nursing beds. A 25 bed special care area has been created to meet the special programming needs of Residents with cognitive loss (dementia). Our special care area was designed using the
philosophy of creating a community. This care area has an activity kitchen, living room and dining room. The Home’s programs and services focus on helping Residents reach their highest level of independence.
In 2009 we started a large renovation project that will change our facility into 4 small households. Each household will have a small kitchen, living room, and dining room space for 20-23 residents. The goal is to enhance individuality and create family. We project to be completed with this project in 2011.
Location Highlights
Silver Bay offers all of the activities of Northern Minnesota. The community and surrounding area offer libraries, colleges, shopping, parks and various businesses that may offer work opportunities.
Minnesota Veterans Home – Luverne
Located on the prairie in Southwest Minnesota, the Minnesota Veterans Home – Luverne provides skilled nursing care for 85 Residents in a small town environment. Programs and services focus on providing person centered care based on a social model of care. The Home follows the Eden Philosophy model of culture change that seeks to address the loneliness, helplessness and
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boredom that can be a nursing home plague. Besides providing a huge array of both internal activities and outings, the Home actively promotes events where children of all ages are involved in the activities with Residents. Also, dogs, cats and birds are an integral part of the Home.
Once a Resident is admitted to the Home, an individualized plan of care is developed by the primary service providers that will address the Resident’s physical, psychosocial and spiritual needs. The goal of the plan is to promote as much Resident choice and independence as possible. The overall goal of the Home is to create and support an environment that provides a homelike atmosphere in a communal setting.
The Minnesota Veterans Home – Luverne has a 17-bed Alzheimer’s/dementia care unit. The entire 42- bed wing, which houses the Alzheimer’s/dementia unit, is focused on meeting the needs of those Residents that have cognitive loss. The other 43 bed wing is home to Residents that can initiate and participate in the social interactions provided in a more independent manner.
Minnesota Veterans Home – Fergus Falls
The Minnesota Veterans Home – Fergus Falls is an 85-bed skilled nursing care facility and is Minnesota’s newest Veterans Home. It opened March 30, 1998, has reached capacity in little over a year, and has developed a solid reputation as demonstrated by long waiting lists. Accompanying the new building are new design ideas. A highlight is the Main Street—a hallway designed like an old town Main Street, with many of the rooms finished to the period 1930 to 1940. Along the Main Street are a barber shop, general store,
library, family inn and clinical exam rooms.
Unique to the facility is its Community Base Outpatient Clinic (CBOC). The clinic is established under a shared use agreement with the Veterans Administration and is the first VA Nurse Practitioner Nursing Home based clinic in the nation. This distinctively provides on-site medical review of eligible Veterans for access to care within the Veterans Administration system.
The Home has also introduced a new concept of nursing care with the innovative Nursing Universal Worker position. This nursing approach increases the accountability of nursing personnel and expands their sphere of influence over the care of the Residents. Primary Focus Nursing – a system developed by their leadership, has won state acclaim through the “Excellence in Practice” award from Aging Services of Minnesota.
As of the first quarter of 2011 the facility will be adding 21 beds for a Special Care Unit, bringing the total capacity to 106 beds. Additionally added is expanded space for dining, activities, a hospice suite, and new space for the Community Based Outpatient Clinic.
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Veterans Homes Program Goals and Objectives
Goal #1:
The Veterans Homes Program will provide high quality care and services.
Objectives:
A. Completed (see list on last page) B. The Veterans Homes Administrators will develop and initiate a person
centered/directed care philosophy by September 1, 2010. C. The Senior Director of Veterans Health Care will evaluate behavioral health concerns
and identify resources available by October 1, 2010
Goal #2:
The Veterans Homes Program will develop a community relations plan to increase awareness and support of the Minnesota Veterans Homes.
Objectives:
A. Completed (see list on last page) B. Completed (see list on last page)
Goal #3:
The Veterans Homes Program will ensure fiscal integrity.
Objectives:
A. Completed (see list on last page) B. The Business Managers and the Financial Officer will identify and recommend options to
enhance financial performance by July 1 of each year. C. Completed (see list on last page) D. The Senior Director of Veterans Health Care will coordinate with the Senior Director of
the Veterans Services to work with the Homes to optimize Veterans benefits and report status annually on July 1.
E. The Veterans Homes Administrators and Directors of Nursing will evaluate current pharmacy services and options and make recommendations for future pharmacy services by March 1, 2010.
F. Completed (see list on last page)
Page 6 of 7
Goal #4:
The Veterans Homes Program will develop a comprehensive plan to address human resource needs.
Objectives:
A. The Staff Development Directors, along with the Senior Director of Veterans Health Care will identify and implement core training standards by July 1, 2011.
B. The Human Resource Directors will develop facility programs to recruit and retain excellent employees by July 1, 2010.
Goal #5:
The Veterans Homes Program will develop a comprehensive risk management program.
Objectives:
A. The Senior Director of Veterans Health Care will coordinate a risk management analysis by July 1, 2012.
B. The Senior Director of Veterans Health Care will coordinate a disaster plan for the Veterans Homes by July 1, 2011.
Goal #6: The Veterans Homes Program will maximize information technology tools. Objectives:
A. The Veterans Homes Administrators, in conjunction with Information Technology staff will identify the technology needs of the Veterans Homes on March 1 annually.
B. The Directors of Nursing, in conjunction with the Director of Quality Services will fully implement the standardized electronic medical record according to level of care by July 1, 2012.
C. The Facilities Program Director in conjunction with the Director of IT and the Physical Plant Managers from each Home will fully implement a standardized Archibus system by July 1, 2012.
D. The Veterans Homes Administrators, in conjunction with the Director of IT will incrementally implement Health Insurance Portability Accountability Act (HIPAA) privacy and security rules to the Homes by October 1, 2010.
Page 7 of 7
List of Completed Objectives as of December 2009
Goal 1, Objective A: The Director of Quality Services for the Central Office will develop and implement a quality improvement plan by October 1, 2009. Goal 2, Objective A: The Legislative Director will develop continuous awareness of legislative issues through training and communications by January 1, 2009. Goal 2, Objective B: The Volunteer Coordinators and the Communications Director will develop a marketing campaign by January 1, 2010. Goal 3, Objective A: The Deputy Commissioner of Veterans Health Care will conduct a feasibility study on Centers for Medicare and Medicaid Services by September 1, 2009. Goal 3, Objective C: The Veterans Homes Administrators will develop a project management system to streamline the use of program funding based on Veterans Homes priorities by July 1, 2009. Goal 3, Objective F: The Deputy Commissioner of Veterans Health Care and the Senior Director of Veterans Health Care will conduct a feasibility study on future program development by September 1, 2009.
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Assisted Living Facility H o m e A g a i n A s s i s t e d L i v i n g
2345 Houston Ave. Bronx, NY 10468
BizPlanDB.com
Home Again Assisted Living is a New York based corporation that will provide assisted living services through its
home-like facility to customers in its targeted market. The Company was founded in 2010 by Eloise Littleton.
1.0 EXECUTIVE SUMMARY
The purpose of this business plan is to raise $1,000,000 for the development of an assisted living facility
while showcasing the expected financials and operations over the next three years. Home Again Assisted Living is a New York based corporation that will provide assisted living services through its home-like
facility to customers in its targeted market. The Company was founded in 2010 by Eloise Littleton.
1.1 The Services Home Again Assisted Living is in the business of providing compassionate assisted living services that will allow developmentally disabled people to live happy and productive lives while having direct access
to assistance. The Company will also retain a number of healthcare professionals in the event that more significant treatment is needed or in the event of an emergency.
In addition to the assisted living services, the Company will have its aides take their patients out so that
they are not constantly confined to the facility. This is especially true for people that are still mobile and active but no longer have the ability to operate a car.
The third section of the business plan will further describe the services offered by Home Again Assisted Living.
1.2 Financing Ms. Littleton is seeking to raise $1,000,000 from as a bank loan. The interest rate and loan agreement
are to be further discussed during negotiation. This business plan assumes that the business will receive a 30 year loan with a 7% fixed interest rate. The financing will be used for the following:
• Development of the Company’s Home Again Assisted Living location.
• Financing for the first six months of operation.
• Capital to purchase FF&E for the facility.
• Capital for licensure and professional fees associated with the establishment of the assisted living
facility location.
Ms. Littleton will contribute $100,000 to the venture.
1
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1.3 Mission Statement It is the goal of the Company to provide a caring environment for those that need assisted living and round the clock medical and living support. The Company is committed to providing a safe and secure
home environment for patients. Management will also ensure that the facility complies with all local, state, and federal regulations concerning assisted living services.
1.4 Management Team The Company was founded by Eloise Littleton. Ms. Littleton has more than 10 years of experience in
the healthcare industry. Through her expertise, she will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts Ms. Littleton expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan The Founder expects that the business will aggressively expand during the first three years of operation. Ms. Littleton intends to implement marketing campaigns that will effectively target
Proforma profit and loss (yearly)
$857,172 $463,583 $265,014 $237,026 $ 27,987
1Year
$917,174 $479,787 $299,811 $223,316 $ 76,495
2
$981,376 $496,628 $337,542 $237,166 $100,376
3
Sales Operating costs EBITDA Taxes, interest, and depreciation Net profit
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
Sales, operating costs, and profit forecast
1 2 3
Year
Sales EBITDA Net profit
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families with individuals that require continued care and oversight within a compassionate assisted living facility.
2.0 COMPANY AND FINANCING SUMMARY
2.1 Registered Name and Corporate Structure Home Again Assisted Living, Inc. is registered as a corporation in the State of New York.
2.2 Required Funds At this time, Home Again Assisted Living requires $1,100,000 of debt funds. Below is a breakdown of
how these funds will be used:
2.3 Investor Equity Ms. Littleton is not seeking an investment from a third party at this time.
Facility acquisition Working capital FF&E Leasehold improvements Licensure Insurance Facility transportation vehicle Marketing budget Miscellaneous and unforeseen costs
Total startup costs
$ 550,000 $ 165,000 $ 75,000 $ 80,000 $ 25,000 $ 30,000 $ 65,000 $ 35,000 $ 75,000
$1,100,000
Projected startup costs
Use of funds
Facility acquisition
50%
Working capital 15%
FF&E 7%
Leasehold improvements
7%
Licensure 2%
Insurance 3%
Facility transportation vehicle
6%
Marketing budget 3%
Miscellaneous and unforeseen costs 7%
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2.4 Management Equity Eloise Littleton owns 100% of Home Again Assisted Living.
2.5 Exit Strategy If the business is very successful, Ms. Littleton may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the
business on behalf of Home Again Assisted Living. Based on historical numbers, the business could fetch a sales premium of up to 6 times earnings plus the value of the appreciated real estate owned by
Home Again Assisted Living.
3.0 PRODUCTS AND SERVICES
Below is a description of the services offered by Home Again Assisted Living.
3.1 Assisted Living Facility Services Home Again Assisted Living’s business seeks to provide people with an alternative to the uncompas- sionate facilities of normal mental health institutions. Management will only hire nurses and assisted
living aides that truly seek to improve the quality of life for the Company’s clients. The staff will engage clients with many projects, activities, and trips that are not offered by institutional facilities.
Additionally, the business will have a number of specialty health professionals on retainer so that each of the Company’s clients receives the highest level of medical service should the need arise. Management intends to have several specialty allied health professionals on retainer. These professionals include:
• Pharmacy Consultants
• Psychologists
• Physical Therapists
• Dieticians
• Speech Pathologists
• Physician Consultant
• Occupational Therapy Consultants
All billing will be administered by a third party processing agent. Using a third party billing agent will
ensure that the specialty services administrated by the Company will be quickly reimbursed by the New York healthcare reimbursement programs.
4.0 STRATEGIC AND MARKET ANALYSIS
4.1 Economic Outlook This section of the analysis will detail the economic climate, the assisted living facility industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
Currently, the economic market condition in the United States is in recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists
expect that this recession will continue until mid-2010, at which point the economy will begin a prolonged recovery period. However, assisted living facilities typically operate with great economic stability as people
will continue to require specialized medical care regardless of the general economic climate.
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4.2 Industry Analysis There are over 19,000 assisted living service companies in the United States. Each year, the industry generates over $49 billion dollars in billable revenue. The industry also employs more than 1,000,000
people, and provides average annual payrolls of over $22 billion dollars.
The assisted living industry has grown tremendously over the past fifteen years. According to the last
economic census, the industry’s five year growth rate is 31.3%. This exceptional growth is attributed to the general public’s acceptance and compassion for developmentally disabled and elderly people. Large institutions that cater to the needs of the developmentally disabled are becoming less popular because of
their cold nature. Developmentally disabled people and their primary caretakers are quickly adopting in-home assisted living services as an alternative to traditional institutional care.
4.3 Customer Profile All of the Company’s patients will be developmentally disabled that require full time assisted living
services. Ms. Littleton expects that patients will have a range of developmental and old age disorders, but are able to live within a facility that provides a host of specialty physical and mental health care
services. Management anticipates that the average client will be between the ages of 25 and 85.
Based on population information provided by the United States’ Census, there are approximately 50,000 people that live within the Company’s market that are in need of assisted living facility services.
Among these residents, the annual household income is $35,000 with 70% of this income coming from pension and Social Security income distribution services.
4.4 Competition In the Company’s targeted area within the New York metropolitan area there are approximately 10
facilities that operate in a similar or identical capacity to that of the Company. The business does not necessarily need to provide a strong competitive advantage over these other competitors as many of these
facilities are already filled to capacity. As such, once the business launches its operations, Management expects that maximum occupancy will occur within one year of establishing the business.
5.0 MARKETING PLAN
Home Again Assisted Living intends to maintain an extensive marketing campaign that will ensure
maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company.
5.1 Marketing Objectives • Develop an online presence by developing a website and placing the Company’s name and contact
information with online directories.
• Implement a local campaign with the Company’s targeted market via the use of local newspaper advertisements and word of mouth advertising.
• Establish relationships with doctors and mental health professionals that will refer business to Home Again Assisted Living.
5.2 Marketing Strategies The Company intends to use a referral network from doctors, surgeons, hospitals, and post operative
clinics in target area in order to generate a patient list. As such, it is imperative that the Company develop these relationships with medical professionals at the onset of operation. Many insurance carriers and
Medicare/Medicaid require that a physician authorize the use of assisted living facility services.
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The Company will use both traditional and experimental forms of marketing to inform, educate, and sell the Company’s assisted living facility service. Traditional means of advertising will include print and
media advertising within local newspapers in the target market.
Finally, the Company will develop an online website that will showcase the assisted living facility, its
operations, its fees, and its commitment to compassionate care.
5.3 Pricing On a monthly basis, Management anticipates that each patient of Home Again Assisted Living will generate approximately $3,000 to $5,000 for the business with the average patient generating revenues
of $3,500. The exact pricing will depend on the level of care and medications required by each individual patient.
6.0 ORGANIZATIONAL PLAN AND PERSONNEL SUMMARY
6.1 Corporate Organization
6.2 Organizational Budget
Senior management
Facility operations Administrative staff
Accounting
Sales—marketing
Administrative
Registered nurse
Assisted living aides
Health consultants
Personnel plan—yearly
$ 50,000 $ 42,500 $100,000 $116,000 $ 21,000
$329,500
1 1 2 4 1
9
1
$ 51,500 $ 43,775 $103,000 $119,480 $ 21,630
$339,385
1 1 2 4 1
9
2
$ 53,045 $ 45,088 $106,090 $123,064 $ 22,279
$349,567
1 1 2 4 1
9
3
Owner Facility manager Registered nurse Assisted living aides Administrative and accounting
Total
Numbers of personnel
Owner Facility manager Registered nurse Assisted living aides Administrative and accounting
Totals
Year
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7.0 FINANCIAL PLAN
7.1 Underlying Assumptions The Company has based its proforma financial statements on the following:
• Home Again Assisted Living will have an annual revenue growth rate of 7% per year.
• The Owner will acquire $1,000,000 of debt funds to develop the business.
• The loan will have a 30 year term with a 7% interest rate.
7.2 Sensitivity Analysis Developmentally disabled and elderly people require assisted living services regardless of the overall economic climate. As such, the Company does not expect that economic recessions or downturns will
affect the overall profitability of the Company. Additionally, much of the revenues generated from the Company will be paid for by public health systems. As this is a health and medical services related
business, the Company is insulated from any changes in the economy.
7.3 Source of Funds
Personnel expense breakdown
Administrative and accounting
6%
Owner 15%
Facility manager
13%
Registered nurse 30%
Assisted living aides 36%
Financing
$ 100,000.00
$ 100,000.00
$ 1,000,000.00
$ 1,000,000.00
$ 1,100,000.00
Equity contributions
Management investment
Total equity financing
Banks and lenders
Banks and lenders
Total debt financing
Total financing
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7.4 General Assumptions
7.5 Profit and Loss Statements
General assumptions
9.5% 10.0% 33.0% 5.0%
15.0%
1
9.5% 10.0% 33.0% 5.0%
15.0%
2
9.5% 10.0% 33.0% 5.0%
15.0%
3
Short term interest rate Long term interest rate Federal tax rate State tax rate Personnel taxes
Year
Proforma profit and loss (yearly)
Sales
Cost of goods sold Gross margin
Operating income
Expenses
Payroll General and administrative Marketing expenses Professional fees and licensure Insurance costs Facility maintenance costs Rent and utilities Miscellaneous costs Payroll taxes
Total operating costs
EBITDA
Federal income tax State income tax Interest expense Depreciation expenses
Net profit
Profit margin
Year
$857,172
$128,576 85.00%
$728,596
$329,500 $ 25,200 $ 17,143 $ 5,219 $ 1,987 $ 20,572 $ 4,250 $ 10,286 $ 49,425
$463,583
$265,014
$ 87,454 $ 13,251 $ 69,678 $ 66,643
$ 27,987
3.27%
1
$917,174
$137,576 85.00%
$779,598
$339,385 $ 26,208 $ 18,343 $ 5,376 $ 2,086 $ 22,012 $ 4,463 $ 11,006 $ 50,908
$479,787
$299,811
$ 76,186 $ 11,543 $ 68,944 $ 66,643
$ 76,495
8.34%
2
$981,376
$147,206 85.00%
$834,170
$349,567 $ 27,256 $ 19,628 $ 5,537 $ 2,191 $ 23,553 $ 4,686 $ 11,777 $ 52,435
$496,628
$337,542
$ 88,897 $ 13,469 $ 68,156 $ 66,643
$100,376
10.23%
3
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7.6 Cash Flow Analysis
Sales, operating costs, and profit forecast
Sales EBITDA Net profit
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0 1 2 3
Year
Proforma cash flow analysis—yearly
Year
Cash from operations Cash from receivables
Operating cash inflow
Other cash inflows
Equity investment Increased borrowings Sales of business assets A/P increases
Total other cash inflows
Total cash inflow
Cash outflows
Repayment of principal A/P decreases A/R increases Asset purchases Dividends
Total cash outflows
Net cash flow
Cash balance
1
$ 94,630 $ 0
$ 94,630
$ 100,000 $ 1,000,000 $ 0 $ 37,902
$1,137,902
$1,232,532
$ 10,158 $ 24,897 $ 0 $ 900,000 $ 56,778
$ 991,833
$ 240,699
$ 240,699
2
$143,138 $ 0
$143,138
$ 0 $ 0 $ 0 $ 43,587
$ 43,587
$186,725
$ 10,892 $ 29,876 $ 0 $ 35,784 $ 85,883
$162,436
$ 24,289
$264,988
3
$167,019 $ 0
$167,019
$ 0 $ 0 $ 0 $ 50,125
$ 50,125
$217,144
$ 11,680 $ 35,852 $ 0 $ 41,755 $100,211
$189,498
$ 27,647
$292,635
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7.7 Balance Sheet
Proforma cash flow (yearly)
Total cash inflow Total cash outflows Cash balance
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
1 2 3
Year
Proforma balance sheet—yearly
Year
Assets
Cash Amortized development costs FF&E Vehicles Property Accumulated depreciation
Total assets
Liabilities and equity
Accounts payable Long term liabilities Other liabilities
Total liabilities
Net worth
Total liabilities and equity
1
$ 240,699 $ 210,000 $ 75,000 $ 65,000 $ 583,000
$1,107,056
$ 13,005 $ 989,842 $ 0
$1,002,847
$ 104,209
$1,107,056
($ 66,643)
2
$ 264,988 $ 213,578 $ 101,838 $ 70,368 $ 617,980
$1,135,467
$ 26,716 $ 978,949 $ 0
$1,005,665
$ 129,801
$1,135,467
($ 133,286)
3
$ 292,635 $ 217,754 $ 133,154 $ 76,631 $ 655,059
$1,175,304
$ 40,990 $ 968,057 $ 0
$1,009,047
$ 166,258
$1,175,304
($ 199,929)
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7.8 Breakeven Analysis
Proforma balance sheet
Total assets Total liabilities Net worth
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
1 2 3
Year
Break even analysis
Monthly revenue Yearly revenue
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
1 2 3
Year
Monthly break even analysis
$ 45,449 $545,391
1
$ 47,038 $564,455
2
$ 48,689 $584,268
3
Monthly revenue Yearly revenue
Year
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7.9 Business Ratios
7.10 Three Year Profit and Loss Statement
Business ratios—yearly
0.0% 85.0%
3.27% 1.10 0.10 10.62
0.24 0.22
1
7.0% 85.0%
8.34% 1.13 0.13 8.75
0.26 0.23
2
7.0% 85.0%
10.23% 1.16 0.16 7.07
0.29 0.25
3
Sales
Sales growth Gross margin
Financials
Profit margin Assets to liabilities Equity to liabilities Assets to equity
Liquidity
Acid test Cash to assets
Year
Profit and loss statement (first year)
Months
Sales
Cost of goods sold Gross margin
Operating income
Expenses
Payroll General and administrative Marketing expenses Professional fees and licensure Insurance costs Facility maintenance costs Rent and utilities Miscellaneous costs Payroll taxes
Total operating costs
EBITDA
Federal income tax State income tax Interest expense Depreciation expense
Net profit
1
$70,760
$10,614
$60,146
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$ 38,632
$21,514
$ 7,219 $ 1,094 $ 5,833 $ 5,554
$ 1,814
85.0%
2
$70,882
$10,632
$60,250
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$21,618
$ 7,232 $ 1,096 $ 5,829 $ 5,554
$ 1,908
85.0%
3
$71,004
$10,651
$60,353
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$21,722
$ 7,244 $ 1,098 $ 5,824 $ 5,554
$ 2,002
85.0%
4
$71,126
$10,669
$60,457
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$21,825
$ 7,257 $ 1,100 $ 5,819 $ 5,554
$ 2,096
85.0%
5
$71,248
$10,687
$60,561
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$21,929
$ 7,269 $ 1,101 $ 5,814 $ 5,554
$ 2,191
85.0%
6
$71,370
$10,706
$60,665
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,033
$ 7,282 $ 1,103 $ 5,809 $ 5,554
$ 2,285
85.0%
7
$71,492
$10,724
$60,768
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,136
$ 7,294 $ 1,105 $ 5,804 $ 5,554
$ 2,379
85.0%
12 BUSINESS PLANS HANDBOOK, Volume 19
ASSISTED LIVING FACILITY
(c) 2011 Cengage Learning. All Rights Reserved.
Business Plans Handbook, Volume 19, Finals 13/9/2010 2:26PM Page 13
Profit and loss statement (first year cont.)
Month
Sales Cost of goods sold Gross margin
Operating income
Expenses
Payroll General and administrative Marketing expenses Professional fees and licensure Insurance costs Facility maintenance costs Rent and utilities Miscellaneous costs Payroll taxes
Total operating costs
EBITDA
Federal income tax State income tax Interest expense Depreciation expense
Net profit
8
$71,614 $10,742
$60,872
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,240
$ 7,307 $ 1,107 $ 5,799 $ 5,554
$ 2,474
85.0%
9
$71,736 $10,760
$60,976
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,344
$ 7,319 $ 1,109 $ 5,794 $ 5,554
$ 2,568
85.0%
10
$71,858 $10,779
$61,079
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,447
$ 7,331 $ 1,111 $ 5,789 $ 5,554
$ 2,662
85.0%
11
$71,980 $10,797
$61,183
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,551
$ 7,344 $ 1,113 $ 5,784 $ 5,554
$ 2,757
85.0%
12
$72,102 $10,815
$61,287
$27,458 $ 2,100 $ 1,429 $ 435 $ 166 $ 1,714 $ 354 $ 857 $ 4,119
$38,632
$22,655
$ 7,356 $ 1,115 $ 5,779 $ 5,554
$ 2,851
85.0%
Year 1
$857,172 $128,576
$728,596
$329,500 $ 25,200 $ 17,143 $ 5,219 $ 1,987 $ 20,572 $ 4,250 $ 10,286 $ 49,425
$463,583
$265,014
$ 87,454 $ 13,251 $ 69,678 $ 66,643
$ 27,987
85.0%
Profit and loss statement (second year)
Quarter
Sales Cost of goods sold Gross margin
Operating income
Expenses
Payroll General and administrative Marketing expenses Professional fees and licensure Insurance costs Facility maintenance costs Rent and utilities Miscellaneous costs Payroll taxes
Total operating costs
EBITDA
Federal income tax State income tax Interest expense Depreciation expense
Net profit
Q1
$183,435 $ 27,515
$155,920
$ 67,877 $ 5,242 $ 3,669 $ 1,075 $ 417 $ 4,402 $ 893 $ 2,201 $ 10,182
$ 95,957
$ 59,962
$ 15,237 $ 2,309 $ 17,307 $ 16,661
$ 8,449
85.0%
Q2
$229,294 $ 34,394
$194,899
$ 84,846 $ 6,552 $ 4,586 $ 1,344 $ 522 $ 5,503 $ 1,116 $ 2,752 $ 12,727
$119,947
$ 74,953
$ 19,047 $ 2,886 $ 17,260 $ 16,661
$ 19,100
85.0%
Q3
$247,637 $ 37,146
$210,491
$ 91,634 $ 7,076 $ 4,953 $ 1,451 $ 563 $ 5,943 $ 1,205 $ 2,972 $ 13,745
$129,542
$ 80,949
$ 20,570 $ 3,117 $ 17,213 $ 16,661
$ 23,389
85.0%
Q4
$256,809 $ 38,521
$218,287
$ 95,028 $ 7,338 $ 5,136 $ 1,505 $ 584 $ 6,163 $ 1,250 $ 3,082 $ 14,254
$134,340
$ 83,947
$ 21,332 $ 3,232 $ 17,164 $ 16,661
$ 25,558
85.0%
Year 2
$917,174 $137,576
$779,598
$339,385 $ 26,208 $ 18,343 $ 5,376 $ 2,086 $ 22,012 $ 4,463 $ 11,006 $ 50,908
$479,787
$299,811
$ 76,186 $ 11,543 $ 68,944 $ 66,643
$ 76,495
85.0%
BUSINESS PLANS HANDBOOK, Volume 19 13
ASSISTED LIVING FACILITY
(c) 2011 Cengage Learning. All Rights Reserved.
Business Plans Handbook, Volume 19, Finals 13/9/2010 2:26PM Page 14
7.11 Three Year Cash Flow Analysis
Profit and loss statement (third year)
Quarter
Sales Cost of goods sold Gross margin
Operating income
Expenses
Payroll General and administrative Marketing expenses Professional fees and licensure Insurance costs Facility maintenance costs Rent and utilities Miscellaneous costs Payroll taxes
Total operating costs
EBITDA
Federal income tax State income tax Interest expense Depreciation expense
Net profit
Q1
$196,275 $ 29,441
$166,834
$ 69,913 $ 5,451 $ 3,926 $ 1,107 $ 438 $ 4,711 $ 937 $ 2,355 $ 10,487
$ 99,326
$ 67,508
$ 17,779 $ 2,694 $ 17,115 $ 16,661
$ 13,259
85.0%
Q2
$245,344 $ 36,802
$208,542
$ 87,392 $ 6,814 $ 4,907 $ 1,384 $ 548 $ 5,888 $ 1,171 $ 2,944 $ 13,109
$124,157
$ 84,385
$ 22,224 $ 3,367 $ 17,065 $ 16,661
$ 25,068
85.0%
Q3
$264,972 $ 39,746
$225,226
$ 94,383 $ 7,359 $ 5,299 $ 1,495 $ 591 $ 6,359 $ 1,265 $ 3,180 $ 14,157
$134,090
$ 91,136
$ 24,002 $ 3,637 $ 17,014 $ 16,661
$ 29,823
85.0%
Q4
$274,785 $ 41,218
$233,568
$ 97,879 $ 7,632 $ 5,496 $ 1,550 $ 613 $ 6,595 $ 1,312 $ 3,297 $ 14,682
$139,056
$ 94,512
$ 24,891 $ 3,771 $ 16,962 $ 16,661
$ 32,226
85.0%
Year 3
$981,376 $147,206
$834,170
$349,567 $ 27,256 $ 19,628 $ 5,537 $ 2,191 $ 23,553 $ 4,686 $ 11,777 $ 52,435
$496,628
$337,542
$ 88,897 $ 13,469 $ 68,156 $ 66,643
$100,376
85.0%
Cash flow analysis (first year)
Month
Cash from operations Cash from receivables
Operating cash inflow
Other cash inflows
Equity investment Increased borrowings Sales of business assets A/P increases
Total other cash inflows
Total cash inflow
Cash outflows
Repayment of principal A/P decreases A/R increases Asset purchases Dividends
Total cash outflows
Net cash flow
Cash balance
$ 7,368 $ 0
$ 7,368
$ 100,000 $1,000,000 $ 0 $ 3,159
$1,103,159
$1,110,526
$ 820 $ 2,075 $ 0 $ 900,000 $ 0
$ 902,894
$ 207,632
$ 207,632
1 2
$ 7,462 $ 0
$ 7,462
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 10,620
$ 824 $ 2,075 $ 0 $ 0 $ 0
$ 2,899
$ 7,721
$215,353
3
$ 7,556 $ 0
$ 7,556
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 10,714
$ 829 $ 2,075 $ 0 $ 0 $ 0
$ 2,904
$ 7,810
$223,163
4
$ 7,650 $ 0
$ 7,650
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 10,809
$ 834 $ 2,075 $ 0 $ 0 $ 0
$ 2,909
$ 7,900
$231,063
5
$ 7,744 $ 0
$ 7,744
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 10,903
$ 839 $ 2,075 $ 0 $ 0 $ 0
$ 2,914
$ 7,989
$239,052
6
$ 7,839 $ 0
$ 7,839
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 10,997
$ 844 $ 2,075 $ 0 $ 0 $ 0
$ 2,919
$ 8,078
$247,130
7
$ 7,933 $ 0
$ 7,933
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 11,091
$ 849 $ 2,075 $ 0 $ 0 $ 0
$ 2,924
$ 8,168
$255,298
8
$ 8,027 $ 0
$ 8,027
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 11,186
$ 854 $ 2,075 $ 0 $ 0 $ 0
$ 2,929
$ 8,257
$263,555
14 BUSINESS PLANS HANDBOOK, Volume 19
ASSISTED LIVING FACILITY
(c) 2011 Cengage Learning. All Rights Reserved.
Business Plans Handbook, Volume 19, Finals 13/9/2010 2:26PM Page 15
Cash flow analysis (first year cont.)
9
$ 8,121 $ 0
$ 8,121
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 11,280
$ 859 $ 2,075 $ 0 $ 0 $ 0
$ 2,933
$ 8,347
$271,901
10
$ 8,216 $ 0
$ 8,216
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 11,374
$ 864 $ 2,075 $ 0 $ 0 $ 0
$ 2,938
$ 8,436
$280,337
11
$ 8,310 $ 0
$ 8,310
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 11,469
$ 869 $ 2,075 $ 0 $ 0 $ 0
$ 2,944
$ 8,525
$288,863
12
$ 8,405 $ 0
$ 8,405
$ 0 $ 0 $ 0 $ 3,159
$ 3,159
$ 11,563
$ 874 $ 2,075 $ 0 $ 0 $ 56,778
$ 59,727
�$ 48,163
$240,699
1
$ 94,630 $ 0
$ 94,630
$ 100,000 $1,000,000 $ 0 $ 37,902
$1,137,902
$1,232,532
$ 10,158 $ 24,897 $ 0 $ 900,000 $ 56,778
$ 991,833
$ 240,699
$ 240,699
Month
Cash from operations Cash from receivables
Operating cash inflow
Other cash inflows
Equity investment Increased borrowings Sales of business assets A/P increases
Total other cash inflows
Total cash inflow
Cash outflows
Repayment of principal A/P decreases A/R increases Asset purchases Dividends
Total cash outflows
Net cash flow
Cash balance
Cash flow analysis (second year)
Q1
$ 28,628 $ 0
$ 28,628
$ 0 $ 0 $ 0 $ 8,717
$ 8,717
$ 37,345
$ 2,652 $ 5,975 $ 0 $ 7,157 $ 17,177
$ 32,961
$ 4,384
$245,083
Q2
2
$ 35,784 $ 0
$ 35,784
$ 0 $ 0 $ 0 $ 10,897
$ 10,897
$ 46,681
$ 2,699 $ 7,469 $ 0 $ 8,946 $ 21,471
$ 40,585
$ 6,096
$251,179
Q3
$ 38,647 $ 0
$ 38,647
$ 0 $ 0 $ 0 $ 11,769
$ 11,769
$ 50,416
$ 2,746 $ 8,067 $ 0 $ 9,662 $ 23,188
$ 43,663
$ 6,753
$257,932
Q4
$ 40,079 $ 0
$ 40,079
$ 0 $ 0 $ 0 $ 12,204
$ 12,204
$ 52,283
$ 2,795 $ 8,365 $ 0 $ 10,020 $ 24,047
$ 45,227
$ 7,056
$264,988
2
$143,138 $ 0
$143,138
$ 0 $ 0 $ 0 $ 43,587
$ 43,587
$186,725
$ 10,892 $ 29,876 $ 0 $ 35,784 $ 85,883
$162,436
$ 24,289
$264,988
Quarter
Cash from operations Cash from receivables
Operating cash inflow
Other cash inflows
Equity investment Increased borrowings Sales of business assets A/P increases
Total other cash inflows
Total cash inflow
Cash outflows
Repayment of principal A/P decreases A/R increases Asset purchases Dividends
Total cash outflows
Net cash flow
Cash balance
BUSINESS PLANS HANDBOOK, Volume 19 15
ASSISTED LIVING FACILITY
(c) 2011 Cengage Learning. All Rights Reserved.
Business Plans Handbook, Volume 19, Finals 13/9/2010 2:26PM Page 16
Cash flow analysis (third year)
Q1
$ 33,404 $ 0
$ 33,404
$ 0 $ 0 $ 0 $ 10,025
$ 10,025
$ 43,429
$ 2,844 $ 7,170 $ 0 $ 8,351 $ 20,042
$ 38,408
$ 5,021
$270,009
Q2
$ 41,755 $ 0
$ 41,755
$ 0 $ 0 $ 0 $ 12,531
$ 12,531
$ 54,286
$ 2,894 $ 8,963 $ 0 $ 10,439 $ 25,053
$ 47,348
$ 6,938
$276,947
Q3
$ 45,095 $ 0
$ 45,095
$ 0 $ 0 $ 0 $ 13,534
$ 13,534
$ 58,629
$ 2,945 $ 9,680 $ 0 $ 11,274 $ 27,057
$ 50,956
$ 7,673
$284,620
Q4
$ 46,765 $ 0
$ 46,765
$ 0 $ 0 $ 0 $ 14,035
$ 14,035
$ 60,800
$ 2,997 $ 10,038 $ 0 $ 11,691 $ 28,059
$ 52,786
$ 8,015
$292,635
3
$167,019 $ 0
$167,019
$ 0 $ 0 $ 0 $ 50,125
$ 50,125
$217,144
$ 11,680 $ 35,852 $ 0 $ 41,755 $100,211
$189,498
$ 27,647
$292,635
Quarter
Cash from operations Cash from receivables
Operating cash inflow
Other cash inflows
Equity investment Increased borrowings Sales of business assets A/P increases
Total other cash inflows
Total cash inflow
Cash outflows
Repayment of principal A/P decreases A/R increases Asset purchases Dividends
Total cash outflows
Net cash flow
Cash balance
3
16 BUSINESS PLANS HANDBOOK, Volume 19
ASSISTED LIVING FACILITY
(c) 2011 Cengage Learning. All Rights Reserved.