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If you are just about to start your journey into the care sector and want a sustainable business, being aware of these ten reasons why many potential new providers fail to get started will help you on your way.
1. Avoiding market research
Market research at a local level is an important place to start. What is happening in your locality and the region where you intend to operate?
Carrying out your research with local commissioners and social service departments will indicate the needs to be served at the local and regional levels.
- Is there a demand for the type of service you hope to offer?
- Is a specific service type urgently required? Could you provide for that need?
- Are there any barriers to setting up a new provider in the local area you are considering?
- Are there other social care providers operating in your area? Who are they? How are they positioned in the marketplace?
- Have you researched companies that provide similar to what you hope to offer?
2. Insufficient knowledge of the requirements of registration
People often assume skills are automatically transferable from one area of the care sector to another. It is not always the case. The standard for registration requires the provider and manager to know the regulations and laws applicable to the service you intend to open. You cannot skim on this requirement as you will be expected to demonstrate to Ofsted how you will apply regulations, standards, laws and good practice to your setting.
3. Skimping on capital and resources
Small care businesses often fall at the first hurdle because they have insufficient cash or access to funds to meet their start-up costs. You will need to factor in substantial costs and spend time with an accountant working out exactly how much you will need to start and sustain yourself for the first six to twelve months. Expenses will include premises, insurances, employing a manager, staff, registration and compliance and the general costs of kitting out a service. Remember, it could be up to a year or more before you start to see any return on investment.
Your Registered Manager is the highest priority resource for your service. You must be realistic. To attract a suitably qualified Manager, you will compete with numerous other organisations amidst a diminishing number of available managers. Your Manager is your most important asset. The manager is responsible for ensuring the long term success of your service. An experienced manager is essential for any new provider. Cutting corners will impact your business and reduce your capacity to become a long term quality provider of care and support.
4. Overlooking tenders & purchasing thresholds
Before embarking on a new venture, make sure you have sufficient research on the requirements of your buyers, their criteria and an in-depth understanding of the regulatory process, pre and post-registration. Spot purchasing is the most likely route for placements in your home, but local authorities are often involved in consortium provider agreements. You might need to tender to be included on their provider list. For this, you will need to convince a panel that your service meets their requirements. You will also be expected to submit returns depending on their terms. There are thresholds when it comes to expectations at a statutory level. A provider who has an inadequate or requires improvement Ofsted inspection rating will not find it easy to secure placements. You must maintain a good Ofsted rating or face pressure to improve or leave the market.
5. Ineffective marketing or none at all
You cannot afford to treat the cost of marketing as an unnecessary expense. A care business with no marketing is like waving in the dark. You know you are out there, but no one else does! Many care businesses don’t market their unique service because marketing seems like an expense that can wait.
There are many ways to promote your business on a small budget. It is just a case of being inventive, creative and knowing where the best options are. Don’t assume that people will know you are in business whatever you do. They won’t unless you tell them.
You will want to concentrate on developing your unique selling point. What is it about your service that should convince buyers that their money and service users are best placed with you?
6. Not knowing the administrative roadblocks
Some business people are not born administrators; they feel more comfortable getting out there and doing the business. Paperwork is easy to ignore but can never be put off indefinitely, especially in the murky world of compliance you will inherit as a care provider administration is extensive.
For any business to run smoothly, you must carefully document sales, purchases, and other expenditures to know whether you are making a profit or not and that you can pay the bills. Invoices must be issued on time and chased up promptly. However, you will need to be prepared for delays in monies reaching your account. Many local authorities have lengthy payment terms. You will also have a vast amount of administration that must be completed each day and each month that can never be neglected.
Having your paperwork in order will always be essential as the world of care is also a world of compliance. Paperwork is extensive, and the penalties for poor record-keeping can be severe, including the loss of your registration.
7. Ignoring changes in legislation
As a small business owner, it is easy to get immersed in your business but not keep ahead with what is happening around you in the sector. In the care sector, nothing stands still. Always keep your eyes and ears open to what is going on in a regulatory sense. When regulations, legislation and guidance change, you need to make practice adaptations and varying requirements. Keep one step ahead. Don’t get left behind. Set up a system that keeps you informed of all the latest changes in the sector. Completing this task at the outset will save you from catastrophe in the long run.
8. Growing too quickly
You have to be disciplined enough to start small instead of empire-building. If you are tempted to diversify too soon, you may be seen to be unrealistic and without sufficient understanding of the marketplace. You may find your resources are spread thin. Start small, get established and grow your reputation for good quality of care in one niche before diversifying.
Don’t underestimate the impact rapid growth can have on your administrative burden.
9. Copying other organisation’s resources
Your organisation must have up to date policies, documents and resources specific to current legislation and guidance and your service type. It is common when starting up to be tempted to beg, steal and borrow the policies and documents needed to register and get up and running. This approach can damage your credibility with the regulator.
10. Trying to do everything
Finally, the problem most small business owners, including those in care, have is that everything falls on their plate. It is likely to be complex at the beginning of setting up your new business. It can be tempting to involve family and friends who have some of the skills you need, but this has a downside. Without sufficient knowledge of the sector and its operational quirks, no matter how skilled people are, insufficient knowledge of this sector can and will cost you dearly. Always ensure you have robust external support.
These are only some pitfalls that can keep you from realising your ambition, but the main trap is trying to do everything yourself.