1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocate thousand dollars of debt funding for the development of a halfway house and group home based in the Philadelphia area. Halfway house, LLC – the Company – planet time among people that need ongoing care or have been recently released from incarceration. The halfway house will provide counseling related to drug and alcohol matters as well among people I have substance abuse issues. The business was founded by Peter Smith. The company anticipates that revenue-generating operations will commence this year.
The Financing
At this time, the business is seeking to acquire a loan of $350,000 in order to carry out the objectives in this business plan. The terms of this loan are to be determined during negotiation, however – this business plan assumes that the company will receive a 20 year loan carrying a 6% interest rate. A majority of the capital on this document will be used for the acquisition of real estate.
The Services
As discussed above, the halfway house will be actively engaged in providing comprehensive care, supervision, and rehabilitative services to people that are in need of assistance or are transitioning back into society. The business will generate its revenues from public contracts with municipal agencies as well as state-based agencies. On-site counselors are properly trained to provide drug and alcohol treatments will be provided to the facility’s residence.
It should be noted that the revenues of the business are completely immune from negative changes in the economy given the high gross margins generated from services coupled with the fact that a majority of the revenues will be produced from municipal and state-based entities.
The third section of the business plan will further discuss the services offered by the halfway house.
Sales Forecast
Below is a chart showcasing the anticipated revenues and profits of the business over the next three years of operation
Expansion Plan
As time progresses, the business will continually seek to establish new halfway house facilities within the greater Philadelphia metropolitan area. This will include potentially acquiring a small apartment complex from which the business can render its services to the general public. However, these growth strategies would not occur until after the third year of operation.
2.0 The Financing
2.1 Use of Funds
The $350,000 sought in this business plan will be used as follows:
- $275,000 – Real Estate
- $50,000 – Furniture, Fixtures, and Equipment
- $25,000 – Working Capital
- $50,000 – Renovations
2.2 Management Equity
Peter Smith will retain a 100% interest in the business.
2.3 Exit Strategies
In the event that management wishes to sell the business to a third-party, a qualified real estate agent as well as a business broker will be hired in order Mr. Smith anticipates that a commission of 5% to 10% would be rendered for managing the sale. Bring halfway houses and group homes, halfway house, LLC could receive a sales premium a month of up to 10 times earnings.
3.0 Halfway House Services
As discussed in the executive summary, the halfway house will be able to aggressively provide its services to municipal and state agencies that outsource their halfway home and group home operations to third-party operators. Management is currently securing the necessary licensure in order to operate in his capacity including rendering mental health services on-site. At the onset of operations, the company anticipates it will have an influx of 10 residents that will be placed by state-based agencies.
The halfway house will have a number of medical professionals and mental health professionals on retainer in order to ensure that the business can provide a very high quality level of service to residents. The company will bill state-based agencies as well as publicly funded healthcare systems in order to generate.
4.0 Market and Industry Analysis
4.1 Economic Analysis
At this time, the United States economy is strong. Unemployment rates have declined sharply since the end of the recession. Interest rates asset prices. Time to borrow money in order to establish a new halfway house. It should be noted that the revenues of this company will be very economically secure given the high gross margins generated from services, and the fact that revenues will be generated from government contracts. The services of a halfway house in group home or in demand at all times.
4.2 Industry Analysis
Within the United States, there are approximately 10,000 cop companies that own or operate one or more halfway house facilities. Each year, these businesses generate approximately $9 billion revenue and provide jobs for about 45,000 people strong growth over the past five years as more and more government agencies outsource their halfway house activities to third-party privately owned businesses. This trend is expected to continue in perpetuity.
One of the key trends within this industry is to provide on-site drug and alcohol treatment services given that many people that are in halfway houses have suffered from these issues in the past. By providing comprehensive substance abuse counseling, the recidivism rate can be substantially declined.
4.3 Competitive Analysis
Although there are number of other operators within the greater demand for outpaces the supply. Government agencies – on both the city and state level – are frequently looking to use the services to place people that are in need of help and require ongoing supervision. As such, while there are other facilities operate in a substantially similar or identical capacity to that of halfway house, LLC – these ongoing competitive risks are minimal.
5.0 Marketing Plan
Foremost, the company will seek to develop ongoing relationships with area social workers frequently have cases among individuals that have been recently been released from incarceration or are in need of substantial ongoing supervision and care. This is important to note given that many state-based agencies require that a social worker sign off on a person going to a halfway house. The business will frequently take out advertisements in mental health publications that circulate on a regional basis.
The halfway house will also maintain an expansive website that showcases the facilities, hours of operation, government service information, and how to contact the business in the event that a family member needs he placed in a group home setting. This website will be mobile friendly and listed among all major search engines. To a limited extent, halfway house, LLC will maintain a presence on social media platforms including FaceBook. Many people who have family members that need help often reach out for recommendations on these platforms – and as such, there is a modest opportunity to source new clients from this platform. Usage of social media also boost the visibility of the businesses website.
The company will use government based contracting and bidding in order to develop it influx of residence on an ongoing basis. Mr. Smith anticipates that approximately 1% of all revenues will be allocated towards general marketing and advertising expenditures. The strong demand for halfway house services will ensure that the business is able to remain your 100% occupancy at all times.
6.0 Personnel Summary
7.0 Financial Plan
7.1 Financial Highlights
- The company will solicit a $350,000 loan during a 20 year term and a 6% interest rate.
- Mr. Smith will contribute $50,000 towards the development of the business.
- All revenues will be generated from government contracted services.
7.2 Sensitivity Analysis
The company’s revenues are not sensitive to changes in the general economic climate. People require halfway house services as well as a group home setting on an ongoing basis. This, coupled with the fact that the company is going to receiving contractually obligated revenues, will ensure that the business is able to remain profitable and cash flow positive at all times. Even during an economic recession, halfway house, LLC will be able to satisfy all underlying debt obligations.
7.3 Profit and Loss Statement
7.4 Cash Flow Analysis
7.5 Balance Sheet
