For your adult residential care facility to see success and continue providing care for residents, you need to make a profit. Profit is a topic not often discussed in adult residential care for two reasons. First, the main goal for many adult residential care owners is to provide quality care for residents; second, some owners quickly realize their original financial projections don’t become their reality. Why do so many adult residential care facilities struggle? Managing revenue and cash flow is a tricky task.
Since you are limited on the number of residents you can care for, it is easy to think your current profit is as good as it gets. Here are six tips on how to manage your adult residential care revenues and profits:
- Review your expenses monthly.
Unnecessary expenses quickly deplete profits. It is valuable to your bottom line to set aside time and review expenses line by line each month. Ask yourself if each expense was necessary, did it add value to your services, and is there a way to get the same results for less. By doing this consistently, you can eliminate costly expenses quickly.
- Invest in your business.
It is tempting to limit your expenses so your bottom line remains where you want it. But it is also important to look for ways you can improve your adult residential care facility. Do any of your appliances or equipment need updated or maintenance to increase efficiency? Investing in these items early prevents you from having to spend a lot more in the future.
- Hold your team accountable.
Employees are one of your biggest expenses, so it is important that you hold them accountable. Audit their performance, create and enforce policies, and communicate your expectations often. When employees know what you expect, they perform better, and your profits aren’t impacted by inefficiency or laziness.
- Set up quarterly tax payments.
As a small business owner, you are required to pay taxes quarterly to the IRS. Failing to set up these payments opens the doors to additional penalties and fines at tax time. Schedule an appointment to review your tax options with your business accountant to avoid penalty charges.
- Create a reserve account.
A reserve account is your business rainy day account. It is impossible to predict future events, and if you don’t have money set aside for unexpected expenses, you can deplete your bank account. Transfer a certain amount of money monthly to the reserve account and use this money for emergency purchases.
- Simplify the payment process.
Make it easier for families and residents to pay you each month. Create an online payment process that sends responsible parties a monthly email with a link to pay online. This eliminates late payments from individuals that overlook the stack of mail on their desk.
Just like in any business, a profitable adult residential care facility won’t happen overnight. It requires time and commitment to review and analyze monthly revenue sources and expenses. These six tips will help you pinpoint what works and what needs to be fixed moving forward.
