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Starting a Foster Home Business – A Complete Guide

Do you want to start a foster group home? If YES, here is a complete guide to starting a foster home business with NO money and no experience.

Okay, so we have provided you an in-depth sample foster home business plan template. We also took it further by analyzing and drafting a sample foster home marketing plan backed up by actionable guerrilla marketing ideas for foster homes. In this article, we will be considering all the requirements for starting a foster home business. So put on your entrepreneurial hat and let’s proceed.

Why Start a Foster Home Business?

If you want to become a social entrepreneur and you have the finance, network and background, then one of your best bet is to open a foster home or orphanage. Even though it is not strictly for profit, but you are sure of getting support from government agencies, NGOs and philanthropists et al.

A foster home is a residential institution that provides care and guardianship for children whose parents are dead or unable to take care of them. If you know that you love children and you are trained to help them, then you should consider starting a foster home in your city.

Setting up a foster home requires hard work and serious planning. You are expected to apply and obtain permit and license to run such facility from the government and your facility must meet the required health and safety standards before you can be allowed to operate it.

Aside from well – trained domestic employees that will be on your payroll, you will also need to hire nurses, care givers, and psychologists et al. Starting a foster home business is indeed capital intensive but at the same time it attracts support from government, philanthropists, NGOs and religious organizations et al. You are rest assured to make good returns on your investment.

Running a foster home facility can gulp quite a lot. This is because of the various responsibilities that are involved in it. They include renting a facility, paying the workers, furnishing the facility to suit the children and babies, medications, feeding, as well as some other very essential things that cannot be neglected. It is for this reason that you may need to source for funds.

If you have a great savings culture and have been able to save up the amount involved, then that is fine; but if not, then you may have to turn to banks for a loan. Also, there are angel investors that may be very interested in supporting your social enterprise.

If indeed you want to open your own foster home facility, then you should read through this article keenly, it will help you establish your own foster home facility from the scratch and build it to profitability within the shortest time possible.

Starting a Foster Home Business – A Complete Guide

  • Industry Overview

The Orphanages and Group Homes industry includes foster homes, group homes, halfway homes, orphanages and boot camps. It is important to state that the industry does not include substance abuse facilities, retirement homes, correctional institutions or temporary shelters. Even though the industry provides some services to adults, these facilities are basically for children and youths.

If you are conversant with happenings in the Orphanages and Group Homes, you will agree that changing preferences and a shift to foster homes rather than group homes will pressure the Orphanages and Group Homes industry’s growth.

In spite of a temporary boost in funding in 2012, state funding is projected to remain constricted over the next half decade hence impacting the revenue generated in the industry. Nonetheless, the industry will benefit from a projected rise in per capita disposable income which will aid private contributions and donations to orphanages and group homes.

The Orphanages and Group Homes Industry is indeed a very large industry and pretty much thriving in developed countries such as United States of America, Canada, United Kingdom, Germany, Australia and Italy et al. Statistics has it that in the United States of America alone, there are about 9,891 licensed and registered orphanages and group homes facilities handling drugs, alcohol and substance addicts scattered all across the United States responsible for employing about 150,855 employees and the industry rakes in a whooping sum of $9 billion annually with an annual growth rate projected at 0.7 percent between 2011 and 2016. Boys Town can boast of having a lion share of the available market share in the industry.

A recent report published by IBISWORLD shows that the distribution of industry facilities trends closely with the distribution of the US population. The report further shows that disbursement is also based on each state’s respective poverty and crime rates.

The report also shows that majority of industry establishments are located in the Southeast, the West, the Mid-Atlantic and the Great Lakes regions of the United States. These four regions account for about 73.1 percent of industry establishments. This is mostly because these four regions hold 73.0 percent of the total population; industry operators are typically located close to the communities that they serve.

Some of the factors that encourage entrepreneurs to start their own foster home facility business could be that the business can easily get support from government, philanthropists and average citizens at all levels and the business is indeed a profitable venture despite the legislature governing the industry.

It is important to state that the foster home facility business is indeed a growing business. Even though the business is not considered a green business in the United States of America, one can comfortably say that the business is booming and open to potential social entrepreneurs.

Over and above, the foster home line of business in developed countries are still enjoying good patronage particularly if they are well positioned and if they know how to reach out to their target market.

Starting a Foster Home Business – Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographics composition of those who need the services of a foster home facility business is restricted to orphans, abandoned children and children whose parents can’t take care of them.

So, if you are looking towards defining the demographics of your foster home facility business, then you should make it far reaching to orphans, abandoned children and NGOs, religious organizations et al who work with orphans, abandoned children and children whose parents can’t take care of them in and around the location where your facility is located.

List of Niche ideas Within the Foster Home Business That You Can Specialize in

Most foster home facility businesses tend to operate general services that a standard foster home facility provider is expected to offer. That is why it seem that there are no niche areas in the industry. But on the other hand, some foster home facilities may decide to major in some key areas such as;

  • Boys’ and girls’ residential facilities (e.g. foster homes, ranches and villages)
  • Residential facilities with counseling
  • Residential facilities without counseling
  • Camps, boot or disciplinary (except correctional) for delinquent youth
  • Delinquent youth, halfway group houses and boot camps
  • Disciplinary camps for delinquent youth
  • Group foster homes for children and orphanages
  • Group homes for the mentally disabled without nursing care
  • Group homes for the visual and hearing impaired
  • Halfway group homes for delinquents and ex-offenders

The Level of Competition in the Foster Home Facility Industry

The level of competition in the foster home industry to some extent depends on the location of the business, your niche area of operation and of course the capacity of your foster home facility. If you can successfully create a unique niche for your foster home facility business, you are likely going to experience little or no competition.

For instance, if you are the only foster home facility business in your location that is into group homes for the mentally disabled without nursing care, or group homes for the visual and hearing impaired or halfway group homes for delinquents and ex-offenders, you can successfully monopolize the market for a long time before you start having competitions.

It is important to also state that the competition in the foster home facility business is not restricted to that line of business but you will also be competing against all players in the Group Home Care Providers industry.

List of Well – Known Brands in the Foster Home Industry

It is important to point out the fact that in every industry, there are always brands that perform better or are better regarded by customers and the general public than others. These are some of the leading foster home facilities in the United States of America and in the globe;

  • Boys Town
  • St Joseph Children’s Home
  • Happy Acres – Children’s Home
  • US Christian Foster Care
  • iCareAboutOrphans
  • AdoptUSKids
  • DePelchin Children’s Center
  • ChildNet: Home

Economic Analysis

When starting a foster home facility business, you just have to get your costing cum economic analysis right if your intention of building the business is to generate profits, grow the business and perhaps expand the business and start competing at the national level.

When conducting costing and economic analysis for your foster home facility business, you have to critically examine these key factors; place, pricing, and promotion. As a matter of fact, you would have to continue to review these key factors at regular intervals while running your foster home facility business. As a foster home facility business owner, you just have to have a proper grasp of your competitive landscape if indeed you want to maximize profits and be in the frontline of the industry.

It is important to note that renting, overhead and medication cost are some of the most important factors contributing to the overall cost of running a foster home facility business and should be considered as a major factor when carrying out your costing and economic analysis.

Starting Your Foster Home Facility from Scratch vs Buying a Franchise

There is no hard and fast rule when it comes to choosing how you intend starting a business. Basically, you should be guided by your overall business vision and mission statement.

If you are looking towards starting a foster home facility business, you would have to start from the very scratch because you can hardly get a franchise of a foster home facility business to buy. It is a business that is open to all and sundry.

Besides starting a foster home facility business from the scratch is less stressful when compared to other similar businesses which usually require detailed groundwork before launching the business. With a foster home facility business, you should just try as much as possible to secure a good residential facility that is inside a residential estate and then leverage on every marketing tool within your disposal especially the internet to market your foster home facility.

Please note that most of the big and successful foster home facilities around started from the scratch and they were able to build a solid business brand.

Possible Threats and Challenges You Will Face When Starting a Foster Home Facility Business

If you decide to open your own foster home facility today, one of the major challenges you are likely going to face is the presence of well – established and well – funded foster home facilities and of course other players in the Group Home Care Providers industry in your target market location. The only way to avoid this challenge is to create your own market; concentrate on orphans, abandoned children and children whose parents can’t take care of them in your immediate community.

Some other threats and challenges that you are likely going to face when you start your foster home facility are mature markets, bad economy (economy downturn), stiff competition, volatile costs, and rising medical care prices. So also, unfavorable government policies, seasonal fluctuations, demographic/social factors, downturn in the economy which is likely going to affect consumers spending and of course emergence of new competitors within the same location where yours is located. There is hardly anything you can do as regards these threats and challenges other than to be optimistic that things will continue to work for your good.

Starting a Foster Home Business – Legal Matters

  • Best Legal Entity to use for this Type of Business

Generally, you have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or a sole proprietorship for a business such as foster home facility. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale foster home care facility business especially if you are just starting out with moderate start – up capital.

But people prefer limited liability Company for some reasons. As a matter of fact, if your intention is to grow the business and operate all across the United States of America, then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your foster home facility business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.

If you take your time to critically study the various legal entities to use for your foster home facility business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your foster home facility business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.

Catchy Business Name ideas Suitable for a Foster Home Facility

Normally, when it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Typically, it is the norm for people to follow the trend in the industry they intend operating from when naming their business.

If you are considering starting your own foster home facility business, here are some catchy names that you can choose from;

  • Golden Generation® Foster Home Facilities, LLC
  • Lucky Starlets™ Foster Home Facility, Inc.
  • Eagles Nest® Foster Home Facility, Inc
  • Prince and Princess Group Home Center
  • Rising Star® Foster Home Center
  • Future Assured© Foster Home Facility
  • American Dream® Foster Home Facility
  • Warm Embrace Group Home Facility Services, Inc.
  • Chosen Saints® Foster Home Facility Company
  • Hilary Brighton Children Care Foundation

Insurance Policies

Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own foster home facility business in the United States of America;

  • General insurance
  • Health insurance
  • Liability insurance
  • Risk Insurance
  • Workers compensation
  • Building/Property insurance
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Payment protection insurance

Intellectual Property Protection/Trademark

If you are considering starting your own foster home facility business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

On the other hand, if you just want to protect your company’s logo and other documents or software that are unique to you or even operation concepts, then you can go ahead to file for intellectual property protection.

Is Professional Certification Needed to Run a Foster Home Business?

If you intend starting a foster home facility in the United States of America, you are encouraged to pursue professional certifications; they will go a long way to show your commitment towards the business. Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in the competitive market.

Besides it is almost impossible to run a foster home facility business in the United States without the proper professional certification. In most countries of the world, practicing any medical related practice without a license is typically illegal. In most jurisdictions, individuals found to be providing medical, nursing or other professional services without the appropriate certification or license may face sanctions including even criminal charges leading to prison.

These are some of the certifications you can work towards achieving if you want to run your own foster home facility company;

  • Certified Breakthrough Parenting Instructor™
  • Childminder Certifications
  • Registered nurse and Licensed practical nurse Certificate
  • Caregiver Certification 

List of Legal Documents You Need to Run a Foster Home Facility

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long arm of the law catches up with you.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own foster home facility company in the United States of America;

  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Health inspection Certificate
  • Copy of license for the service support facility and/or a recent inspection report
  • Non – disclosure Agreement
  • Employment Agreement (offer letters)
  • Employee’s Handbook
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use (if you have a website)
  • Online Privacy Policy Document (basically for online payment portal)
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Building License
  • Franchise or Trademark License (optional)

Financing Your Foster Home Facility Business

Leasing of a standard facility that can accommodate your residents and staff and of course the purchase of medical equipment are part of what will consume a large chunk of your startup capital. In essence, if you choose to start the business on a small scale, you will still need to source for fund to finance the business.

When it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for startup capital for your foster home facility business;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for loan from your bank
  • Pitching your business idea and applying for business grants and seed funding from government, donor organizations and angel investors
  • Source for soft loans from your family members and your friends

Choosing a Suitable Location for your Foster Home Business

Starting a business such as foster home facility business comes with its own challenges as it cannot be started in just any location. As a matter of fact, you will need approval from your local council and other regulating authorities in the city you intend opening your foster home or group home facility business.

Generally, in business, it cannot be overemphasized that the location you chose to start your business is key to the success of the business; hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of the right demography.

Most importantly, before choosing a location for your foster home facility business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.

These are some of the key factors that you should consider before choosing a location for your foster home facility business;

  • The demography of the location
  • The demand for the services of foster home facilities and other group homes related businesses in the location
  • Accessibility of the location
  • The number of foster home facilities and group home related services businesses in the location
  • The local laws and regulations in the community
  • Traffic, parking and security et al

Starting a Foster Home Business – Technical and Manpower Details

When it comes to starting a standard foster home, you will need stethoscopes, blood pressure cuffs, oxygen tanks, first aid kits and other related equipment that will aid you in carrying out your job. It is important to state that these equipment can be purchased as fairly used if you are operating on a low budget. You will also need a computer, printer, home healthcare software, telephones, pager, photocopier, scanner, fax machine, first aid kit, gloves and uniform.

When it comes to choosing between renting and leasing a facility for your foster home facility business, the size of the facility you want to own, and your entire budget for the business should influence your choice. Besides, you will need a facility that is in a serene environment, a facility that is big enough to accommodate the number of residents and staff working for you.

As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision. Averagely, when it comes to starting a standard foster home business on a large scale, you would need the services of the following professionals; Chief Operating Officer (you can occupy this position), Fund Raisers, Accountant, Nurse Aide, Childminders and Counselors, Home Administrator (Human Resources and Admin Manager), Front Desk Officer, Cooks, Security Guards and Cleaners.

Over and above, you would need a minimum of 10 to 15 key staff members to effectively run a medium scale but standard foster home facility and these key roles can be occupied by volunteers.

The Service Delivery Process of a Foster Home Facility Business

The service delivery in a foster home facility to a large extent depends on the organization and what they stand to achieve.

Basically, a foster home facility business looks for abandoned children, orphans who don’t have people to take care of them and other children whose parents don’t have the capacity to take care of them; once they are legally brought into the home, they are groomed just like children with their parents.

In order to generate money to take care of the children under their care, the homes apply for grants and donations in cash and kind from donor agencies, government agencies, NGOs, religious organizations and philanthropists et al. It is important to state that a foster home facility business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated foster home facility business process is not cast on stone.

Starting a Foster Home Business – The Marketing Plan

  • Marketing ideas and strategies

The fact that the entry barrier for starting a small – scale foster home facility business is low means that there is bound to be more players in the industry no matter the location you choose to start yours. In essence, you must be creative  if you must carve out a market for yourself within the available market in your community, city, state or country.

So, when you are drafting your marketing plans and strategies for your foster home facility, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to your line of business. This will help boost your chances in the market place when marketing your services.

Here are some of the platforms you can utilize to market your foster home facility;

  • Introduce your business by sending introductory letters alongside your brochure to households, hospitals, religious organizations, clubs/organizations, campuses and NGOs et al who work with abandoned children and orphans around the location where your foster home facility is located
  • Open your foster home facility with a party so as to capture the attention of residents who are your first targets
  • Engage in roadshows in targeted communities from time to time to market your services
  • Advertise your services in community based newspapers, local TV and radio stations
  • List your foster home on yellow pages ads  (local directories)
  • Leverage on the internet to promote your foster home facility
  • Engage in direct marketing and sales
  • Encourage the use of word of mouth marketing (referrals)
  • Leverage on the internet to promote your business
  • Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks
  • Engage the services of professional fund raisers to help you raise funds

Factors That Will Help You Get the Right Product Pricing

One key factor that will help you offer your services at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.

You can also try as much as possible to work with independent contractors and fund raisers; it will help you save cost for paying sales and marketing executives.

So also, if you are able to secure business partnership with hospitals and relevant organizations as it relates to getting referrals, then you will be able to get the right pricing and of course maximize profits from your foster home facility business.

As regards medications, toiletries, cooking ingredients and other supplies that you need to effectively run your foster home facility, you need to ensure that you purchase your items directly from the manufacturers or from wholesale distributors in pretty large quantities. The truth is the higher the quantity of items that you purchase directly from the manufacturers or wholesale distributors, the cheaper you tend to get them.

Strategies to Boost Your Foster Home Business Brand Awareness and Create Your Corporate Identity

If your intention of starting a foster home facility business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening several foster home facilities and franchising, then you must be ready to spend money on promotion and advertisement of your brand.

No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your foster home facility business;

  • Place adverts on both print (newspapers and magazines) and electronic media platforms
  • Sponsor relevant community based events
  • Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your services
  • Install your billboards in strategic locations all around your city or state
  • Engage in roadshows from time to time in targeted neighborhoods to create awareness of your foster home facility
  • Distribute your fliers and handbills in target areas
  • Contact households, hospitals, religious organizations, clubs/organizations, campuses and NGOs et al who work with orphans, and abandoned children around the location where your foster home facility is located informing them of the services you offer
  • List your foster home facility in local directories/yellow pages
  • Advertise your foster home facility in your official website and employ strategies that will help you pull traffic to the site
  • Position our Flexi Banners at strategic positions in the location where your foster home facility is located
  • Ensure that all your staff members wear your branded shirts and all your vehicles are branded with your company logo et al.
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