Social Care business start-up pitfalls and how to avoid them.

If you are just about to start out in the care sector and want a sustainable business you love, and that works for you, then, being aware of these ten reasons why many potential new providers fail, will help you on your way.

1.    Lack of market research
It is important that when you plan to start up, you carefully research the market to check that:
  • There is demand at a local level which would lead to a sustainable business.
  • You are 100% clear about what kind of service you want to offer
  • Buyers are prepared to pay the price required for you to make a decent living and pay the bills and wages.
2.    Insufficient knowledge of the requirements of registration

As a registering care business, you will be expected to have business and sustainability plans before you apply.  You will need to submit,

A business plan and annual reports

Financial references, records and forecasts

Evidence of planning permission and certificate of lawfulness

A Certificate of Insurance

A statement of purpose

A children’s or residents guide

Policies and Procedures

Enhance disclosure and barring checks (DBS)

Health declaration

Copies of qualifications

Pre-registration checks will be carried out on the registering individual, directors and registering managers.

You will be required to have a good understanding of the business and care you offer, undertake training and development even if you don’t intend to be involved on a day-to-day basis. This will include knowledge of statutory regulations, compliance and/or be willing to train up. In addition you will need to demonstrate your understanding of the regulatory process going forward.

3.    Insufficient capital

When starting out it is easy to identify what capital is required for fixtures and fittings, household items and resources. What many new care business owners forget about is the cash needed to fund the additional business or regulatory necessities of the property, the day-to-day and start up , requirements, i.e. cash to pay expenses before your buyers pay you. This is known as your working capital.

Small care businesses can fail because they have insufficient cash to start off to meet these immediate expenses. If you wish to survive make sure you set aside enough cash to meet all your needs for the first few months. This includes employing staff, registration and compliance requirements and the general expenses of kitting out a service.

4.    Tenders & thresholds

Local authorities are often involved in consortium provider agreements. This means you will likely need to tender to be included on their provider list. For this you will need to prepare a thorough tender and convince a panel that your service meets their requirements. You will also be expected to submit returns depending on their terms.

There are also thresholds when it comes to expectations at a statutory level. A provider who has an inadequate or requires improvement inspection rating will not find it easy to secure placements. Before embarking on a new venture make sure you have sufficient research in place on the requirements of your buyers, their criteria and in-depth understanding of the regulatory process, pre and post registration.

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.  In fact targeted marketing will help your service shine from the outset.

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. What ever you do, don’t assume that people will quickly know you are in business they won’t unless you tell them. You will also want to concentrate on developing your unique selling point.  What is it about your service that should convince buyers that their money and their service users are best placed with you?  (If you are stuck on unique selling points, you might like to download our Free Unique Selling Point Analysis Template by registering on our Social Care Virtual Office Onrezume. The free analysis template is available in the free resources tab.)

 6.    Not knowing the road blocks

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. The recording requirements for services and the amount of statutory and non-statutory guidance is extensive.

For any business to run smoothly sales, purchases and other expenditure must be carefully documented, so you 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 are not particularly quick off the block when it comes to payment. They may also have small print as to the length of their payment terms.

Having your paperwork in order will always be essential as the world of care, is also a world of compliance.  Paperwork is extensive and 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 very easy to get immersed in your business and not see what is happening around you in the sector. Always keep your eyes and ears open to what is going on in a regulatory sense. When regulations, legislation and guidance change this generally means practice adaptations and varying requirements. Keep one step ahead. Don’t get left behind. Set up a system from the outset 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.

You can access some relevant links from our online virtual office Onrezume.  Register here for the free access version. 

8.    Growing too quickly

Surprisingly, growing too quickly can be a problem. You have to be disciplined enough to start small instead of empire building.  If you are tempted to diversify to quickly,  you may be seen to be unrealistic and without sufficient understanding of the market place.  You may find your resources are spread thin. Start small, get established and grow your reputation for quality of care in one niche before diversifying.

Also, don’t under-estimate the impact rapid growth can have on your administrative burden. As I mentioned earlier, getting behind on the paperwork can have an equally damaging effect on your business.

9.    Copying other organisations resources

It is common when starting out for people to beg, steal and borrow, the policies and documents needed to register and get up and running.  This will generally be spotted by the regulator during your registration process and can damage your credibility from the outset.  Your resources need to be specific to your service type. You may like to check out the provider resources you can use to start up your service here. Sign up to our portal and have a look at how you might organise your resources.

10. Trying to do everything

Finally, the problem most small business owners, including those in care,  have, is the fact that everything falls on their plate. Inevitably this is how it is likely to be in the beginning of any 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 in their personal area, insufficient knowledge of this sector can and will cost you dearly.  Consider outsourcing to reputable, affordable and knowledgable consultants or services to help you with your start-up requirements. Always ensure you have robust external support.

Being aware of these pitfalls and avoiding them will help you get your new business off to a fine start.

If you need support with your care start-up, give us a call on 01303 680460 or check out our services here.

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