Financial Plan Explanation Current Business Model

This project is for starting a group home for veterans. The group home will be paid for by a mix of government payers (VA, Medicare, Medicaid), and private payer. The group home is going to have a premium service offering, so that veterans feel like they are treated with respect. The reality is that many veterans receive substandard care, when their families can afford to give them the best possible care. It is our mission to ensure that veterans are afforded the opportunity to enjoy a standard of care that befits their service to America.

The group home model works on the principle that the veterans who live in the home will share some facilities (Leonard, 2017), including access to medical care. The home staff will take care of many of their day-to-day living needs, but the patients will be able to live in a semi-autonomous manner. The end result of this model is that a team of highly qualified caregivers will be able to look after our veterans and give them the care and attention, and high standards of service, that they have earned.

Capital Expenditures

The proposal is to start a group home for veterans, so there is significant upfront cost. It is estimated that $18 million will be required to acquire and fit a facility. Other startup costs are more of the ongoing variety. These capital expenditures will be used to secure a building, retrofit it for the group home, and then to equip it with medical equipment, computers, furniture and other capital expenses.

The plan calls for the initial startup to take place in 2019. From that point, there will be some maintenance associated with capital expenditures, but otherwise most costs will be limited to operating costs.

Contingency Plans

To ensure that it is able to meet such unexpected spending, the group home proposes to set aside a contingency fund equalling 20% of total revenue. This amount is actually a substantial amount of the projected profits for these first three years. This contingency will be the operating contingency. It will be used for things like insurance claims, legal actions and other ad hoc, unforeseeable expenses that would otherwise threaten the solvency and liquidity of the group home.
Another contingency plan is in place for the construction of the facility. There is high risk of cost overruns in such a construction, so the company has set aside a $2 million line of credit with a local bank, to tap into in case there is an issue with the construction. The line of credit will be secured against the land on which the building sits. The final contingency plan is for insurance, which will cover a range of different potential issues, from natural disasters to fire to malpractice. The cost of insurance has been built into "overhead expenses".

Budget Summary & Assumptions

The veterans group home is expected to be completed and opened in 2019. There is substantial pent-up demand for this type of service, according to our research, and as a result the home is expected to operate at capacity almost immediately. As a result, the initial revenues are expected to be $30 million, and these are expected to grow as the facility increases fees and capacity over the next couple of years.

In the budget, the expenditures are recorded as a percentage of revenue, which is common practice with a new business where the numbers must be estimated. Salaries are expected to be around…