You need a minimum of $487,380 to open a group home facility on a small scale. Note that this amount includes the salaries of all the staff for the first three months of operation.

When it comes to starting a group home facility business, the major areas that you look towards spending the bulk of your cash is in renting or leasing a standard facility and converting it into a group home facility, equipping the facility, purchasing supplies such as medications, toiletries, food and water et al.

Aside from that, you also need to pay your employees, renew your licenses and pay your utility bills. These are the key areas where you will spend your start-up capital;

Estimated Cost of Opening a Group Home

1. The total fee for registering the business in the United States of America – $750.
2. Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
3. Marketing promotion expenses for the grand opening of the home in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
4. The total cost for hiring a business consultant including writing a business plan – $2,500.
5. The total cost for the purchase of insurance (general liability, workers’ compensation, and property casualty) coverage at a total premium – $2,400.
6. The cost for renting or leasing a facility that will be converted into the nursing home and that can accommodate the number of residents that will be accommodated per time (Re – construction of the facility inclusive) will cost – $300,000.
7. Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
8. Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $70,000
9. The cost for the purchase of supplies (medications, toiletries, food and water et al) – $50,000
10. The cost for store equipment (cash register, security, ventilation, signage) – $4,750
11. The cost of purchase and installation of CCTVs: $2,000
12. Equipping the nursing home (sound system, DVD players, beddings, Flat Screen TVs, computers, printers, projectors, markers, pens and pencils, furniture, telephones, filing cabinets, and electronics) will cost – $40,000
13. Miscellaneous: $2,000

From the rough estimate above, you would need a minimum of $487,380 (four hundred and eighty – seven thousand seven hundred and eighty USD)  to establish a medium-scale but standard group home facility in any city in the United States of America.

This amount includes the salaries of all the staff for the first three months of operation.

Note that this is a rough estimate and we usually advise our readers who are interested in opening a group home facility to directly contact wholesalers and suppliers of the types of furniture, beddings, gadgets, and electronics et al they want to have in their group home in order to get the real time prices of these items.

The truth is that, if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.

3-Year Sales Forecast Summary

Year 1:

• Revenue: $324,000
• Net Profit: $70,000
• Breakeven Monthly Fee per Resident: ~$2,351.85

Year 2:

• Revenue: $359,100
• Net Profit: $102,100

Year 3:

• Revenue: $396,900
• Net Profit: $136,900

Sales Forecast Breakdown (Profit/Loss and Breakeven Point)

1. Capacity and Occupancy

• Initial Capacity: 10 residents
• Average Occupancy Rate: 90% for Year 1, (95% for Year 2), and (100% for Year 3)

2. Revenue per Resident

• Monthly Fee per Resident: $3,000. This fee includes lodging, meals, care, and services provided.

3. Operational Costs

• Fixed Costs: $200,000 annually (including staff salaries, utilities, insurance, and property maintenance)
• Variable Costs: $500 per resident per month (covering food, medical supplies, and activity costs)

4. Growth

• Fee Increase: 5% annually to account for inflation and increased operational costs.

Annual Revenue

• Year 1: 10 residents x 90% occupancy x $3,000 per month x 12 months = $324,000
• Year 2: 10 residents x 95% occupancy x $3,150 per month (5% increase) x 12 months = $359,100
• Year 3: 10 residents x 100% occupancy x $3,307.50 per month (additional 5% increase) x 12 months = $396,900

Variable Costs

• Year 1: 10 residents x 90% occupancy x $500 per month x 12 months = $54,000
• Year 2: 10 residents x 95% occupancy x $500 per month x 12 months = $57,000
• Year 3: 10 residents x 100% occupancy x $500 per month x 12 months = $60,000

Gross Profit

• Year 1: $324,000 – $54,000 = $270,000
• Year 2: $359,100 – $57,000 = $302,100
• Year 3: $396,900 – $60,000 = $336,900

Net Profit

• Year 1: $270,000 – $200,000 (Fixed Costs) = $70,000
• Year 2: $302,100 – $200,000 = $102,100
• Year 3: $336,900 – $200,000 = $136,900

Breakeven Analysis

To find the breakeven point in terms of monthly fees per resident, we use the formula:

For the First Year of business, if we assume the variable cost remains constant at $500 per resident per month in the group home:

Breakeven Monthly Fee Per Resident for the first year is approximately $2,351.85

This calculation assumes the initial conditions and costs outlined, aiming to cover both the fixed and variable costs associated with running the group home.

This forecast indicates that with a starting capital of $487,380, your group home business is projected to be profitable across the three years, with increasing net profits as the occupancy rates improve and the fees increase to account for inflation and rising operational costs.

The breakeven analysis helps in understanding the minimum fee required to cover costs, offering a baseline for pricing services competitively while ensuring the business’s financial viability.

Factors That Will Influence the Cost Of Opening a Group Home Facility

Here are some of the general factors that will influence the cost of opening a group home facility business in the United States of America.

1. The Choice of Location

As a matter of fact, there are business consultants cum realtors who are specialized in helping people choose an ideal location for their type of business.

So, you will now agree that location can influence the cost of starting a group home facility business.

For example, renting or leasing a facility in a location that is off the city center or off residential estate will be less expensive when compared to renting or leasing a facility in a well-populated growing residential estate; a location in an ideal cozy and serene environment, a location in a metropolitan city with the right demographic composition.

2. The Required Licenses and Permits

In the United States of America, you cannot open group home facility business without first applying for the mandatory licenses and permits.

Of course, you would need an accreditation certificate, building license, zonal permits, and signage permits amongst others.

These license and permits cost money and it will influence the overall cost of opening a nursing home in the United States of America.

Also note that you must pass through inspections before you can be issued your licenses and permits and this will also cost you money.

In order to get the overall cost of licensing and permits associated with opening a new group home facility, we will advise that you reach out to your city government. You also need to consider state and federal requirements too.

3. The Type of Facility

As regards the facility, you have the options of renting, leasing or designing and constructing your facility from the scratch.

With renting and leasing a facility, you might just have to spend extra cost to modify the facility to fit into the number of rooms, waiting room, assembly hall, playing space, dining halls, library or gym you want to have in your group home facility, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants.

If you want to construct your group home facility from the scratch, you will buy the land or a property, bring up your design and construct and equip the group home facility the way you want.

With that, you will agree that you are going to spend way more when compared to people that rent or lease a facility.

4. The Number of Residents They Want to Admit Per Time

No doubt, there are standard group homes that accommodate less than 50 residents per time and there are group homes that can accommodate up to 100 residents per time.

So, the more the number of residents you want to accommodate, the more money you are expected to spend to set up the business.

5. The Cost of Hiring and Paying a Business Consultant and Attorney

If you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney.

A business consultant will help with drafting a workable business plan document, marketing plan and strategy, comprehensive SWOT analysis, while performing other advisory services.

An attorney will help you with registering the business, drafting contract documents, and offer you all the legal expertise that will help you start the business on the right foundation.

Of course, you will agree that these services will cost you money and it will indeed influence the overall cost of opening a group home facility in the United States of America.

6. The Cost for Branding, Promotion, and Marketing of the Group Home Facility Business

Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your new group home facility.

As a matter of fact, it is not cheap to come by an expert in branding, promotion, and marketing that will help you compete with brands that are already determining the market direction of the industry in your city.

So, if you add the cost of paying a branding and marketing expert, it will surely increase the cost of opening your group home facility business.

7. The Cost for Furnishing and Equipping the Facility 

Before you can open a group home facility business, you should budget and buy chairs and tables, beds, projectors, flat screen TVs, sound system, DVD players, Satellite dish and decoder, office furniture (table, stools, and sofas), drawers and cabinets,

Telephones, filing cabinets, office equipment (cash register, security and fire alarm and protection gadgets, CCTV, ventilation, signage), and sports and gym equipment and wares amongst others.

All these will cost money and it will influence the overall cost of opening a group home facility business in the United States of America.

8. The Cost for Insurance

Interestingly, in the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers.

Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your group home.

9. The Cost for Registering the Business

You cannot legally operate any business in the United States or most countries of the world.

Although the cost of registering a business is affordable, but it will still add to the overall cost of opening a group home facility business in the United States of America.

10. Source of Your Supplies and Ongoing Expenses

Another major factor that will determine the cost of opening a group home facility business in the United States of America is the source of your supplies such as medications, office supplies, toiletries, and food.

For example, if you have access to manufacturers of the type of medications, office supplies, toiletries, and food supplies that you would need, it will sure cut down the cost of running the group home as against buying your medications, office supplies, toiletries, and food supplies from retailers.

So also, if you have an in-house cook for the group home facility, it will reduce the cost of food.

11. Cost of Recruiting and Training Your Staff

The fact that you are opening your group home facility business as a new business means that you are expected to recruit and train your staff.

The training will help you sell the corporate culture of your organization to the new employees.

As expected, it will cost you money to hire expert trainers that will help you train and bring your new hires up to speed and that will add to the overall cost of opening a group home facility business.

12. The Cost for the Purchase and Customizing of Uniforms

Your residents and personnel are expected to all have different uniforms and all these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a group home facility business in the United States of America.